Analysts Lowered Their Estimates after Chipotle’s 1Q16 Results



Same-store sales growth revision

To win back the loyalty of its customers, Chipotle Mexican Grill (CMG) implemented enhanced food safety measures. The company claims that these safety measures are the best in the industry. Also, to communicate these measures and increase the traffic at its restaurants, the company set a budget of $55 million. This is the highest in its history.

Analysts Revise Their Estimates Downwards After Chipotle’s 1Q16 Results

Despite all of these measures, the same-store sales growth in 1Q16 was -29.7%. It was lower than the expected value of -28.6%. Also, the same-store sales growth for first three weeks of April was -26%. This compelled analysts to lower their estimates for the next four quarters. According to revised estimates, Chipotle is estimated to post same-store sales growth of -18.8%, -11.4%, 5.1%, and 13.2% from earlier estimates of -17.1%, -10%, 7.1%, and 14.8%, respectively.

Analysts Revise Their Estimates Downwards After Chipotle’s 1Q16 Results

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Revised adjusted EPS

With same-store sales growth, revenue, and earnings before interest and tax margins revised downward, it’s expected that the estimated EPS (earnings per share) will also decline. Analysts lowered their EPS estimates for fiscal 2016 from earlier estimates of $5.6 to $4.8. The revised estimate represents a decline of 70% from the EPS in 2015. Chipotle also forms 0.14% of the holdings of the iShares Russell 1000 Growth ETF (IWF).

Peer comparison

For fiscal 2016, analysts expect Panera Bread (PNRA), Shake Shack (SHAK), and Brinker International (EAT) to post EPS growth of 4.5%, 175%, and 4.4%, respectively.


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