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How Much Upside Is Left in Chipotle’s Stock Price?

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Stock performance

In the first quarter, Chipotle Mexican Grill (CMG) posted adjusted EPS (earnings per share) of $2.13 on revenue of $1.2 billion. Analysts were expecting the company to post EPS of $1.57 on revenue of $1.2 billion. The company also outperformed analysts’ SSSG (same-store sales growth) estimate of 1.3%, posting SSSG of 2.2%.

The company’s strong SSSG, improved margins, and higher earnings appear to have increased investors’ confidence, leading to a rise in its stock price. On May 14, Chipotle was trading at $425.06, a rise of 25.2% since the announcement of its first-quarter earnings results on April 25.

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Year-to-date performance

Last year was tough for Chipotle, with the company’s stock price falling 23.4%. However, since the beginning of 2018, its price has risen 47.1%. The appointment of Brian Niccol and Chris Brandt as the company’s new CEO and chief marketing officer, respectively, along with strong first-quarter earnings led to a rise in its stock price.

During the same period, its peers Shake Shack (SHAK) and the Cheesecake Factory (CAKE) have returned 34.2% and 7.8%, respectively. Comparatively, the S&P 500 Index (SPX) and the Consumer Discretionary Select Sector SPDR ETF (XLY) have returned 2.1% and 6.5% year-to-date, respectively.

Series overview

In this series, we’ll look at analysts’ revenue and EPS expectations for Chipotle for the next four quarters. We’ll also cover its management’s guidance for 2018. We’ll end this series by looking at Chipotle’s valuation multiple and analysts’ estimates.

Let’s start by looking at analysts’ revenue expectations for CMG over the next four quarters.

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