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Analysts’ Earnings Expectations for Chipotle

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Aug. 18 2020, Updated 5:34 a.m. ET

Analysts’ expectations

For the next four quarters, analysts expect Chipotle Mexican Grill (CMG) to post EPS (earnings per share) of $8.54, which represents 51.4% growth from the $5.64 seen in the last four quarters.

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EPS growth

Chipotle’s EPS growth is expected to be driven by revenue growth, EBIT (earnings before interest and tax) margin expansion, a lower effective tax rate, and share repurchases. Analysts expect the company to have an EBIT margin of 8.0% for the next four quarters, compared with 5.5% in the last four quarters. Analysts expect Chipotle’s costs of sales and SG&A (selling, general, and administrative) expenses to fall, supporting its EBIT margins in the next four quarters. Costs of sales are expected to fall to 1.4% of total revenue due to sales leverage from positive SSSG (same-store sales growth) and labor management improvements. SG&A expenses are expected to fall from 14.5% to 6.6% of revenue due to sales leverage and lower marketing and promotional expenses.

From the beginning of 4Q16 until the end of 3Q17, the company repurchased shares worth ~$300 million. By the end of 3Q17, Chipotle had ~$95.4 million under its share repurchase program. On October 24, 2017, Chipotle’s board authorized additional share repurchases of $100 million. Share repurchases reduce the number of shares outstanding, boosting a company’s EPS.

Peer comparison

For the next four quarters, Shake Shack’s (SHAK) and The Cheesecake Factory’s (CAKE) EPS are expected to fall 5.4% and 5.1%, respectively. Next, we’ll look at analysts’ recommendations for Chipotle.

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