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Chipotle’s 4Q15 Earnings Could Pale Compared to 4Q14

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CMG’s earnings release

Chipotle Mexican Grill (CMG) will release its 4Q15 earnings on February 2, 2016, after the market closes. 2015 was quite a tumultuous year for the company. Chipotle lost 29.2% of its value in 2015. YTD (year-to-date) as of January 25, the stock has fallen another 7.8%.

So far in 2016, several restaurant stocks have fallen due to broader market tensions. Yum! Brands (YUM) has fallen 7.7%, Shake Shack (SHAK) has fallen 12.2%, and the comparable benchmark Consumer Discretionary Select Sector SPDR ETF (XLY) has fallen 7.3% YTD. However, McDonald’s (MCD) has risen slightly by 0.9% as a result of its impressive earnings released on January 25.

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4Q15 earnings

The above chart shows how Chipotle’s shares have moved after its earnings results. Expectations for 4Q15 are already low, given that it’s up against the solid performance of the corresponding 4Q14. However, in the midst of the recent food safety issues connected to the E. coli incidents the company experienced in the past three months, it’s not a surprise that Chipotle will report weak 4Q15 results.

Series overview

In this series, we’ll take a look at the expectations around Chipotle’s upcoming earnings. These include expectations of revenue, margins, and earnings per share. We’ll also look at expectations regarding one of the most important performance metrics for restaurants, especially Chipotle: same-store sales growth. We’ll also discuss the company’s valuation multiple and analysts’ recommendations and revised price targets.

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