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Why Investors Are Optimistic about Chipotle’s Q2 2018 Earnings

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Jul. 19 2018, Updated 12:33 p.m. ET

Stock performance

Chipotle Mexican Grill (CMG) plans to post its second-quarter earnings after the market closes on July 26. On July 17, CMG was trading at $452.54, which represents a 33.3% increase since the announcement of its first-quarter earnings on April 25. The company’s stock price was driven by strong first-quarter earnings and initiatives that were taken by the company’s management to drive its sales.

In the first quarter, the company outperformed the analyst EPS estimate of $1.57 by posting EPS of $2.13. Also, it beat the SSSG (same-store sales growth) estimate of 1.3% by reporting SSSG of 2.2%. The company’s margin also improved during the quarter, leading to a rise in the company’s stock price.

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Year-to-date performance

After a decline of 23.4% in its stock price in 2017, Chipotle has returned 56.6% since the beginning of 2018. The appointment of Brian Niccol as the company’s new CEO in March and its strong first-quarter earnings led to a rise in Chipotle’s stock price.

Peers Shake Shack (SHAK) and the Cheesecake Factory (CAKE) have returned 54.8% and 18.6%, respectively. The S&P 500 ETF (SPY) and the Consumer Discretionary Select Sector SPDR ETF (XLY) have returned 5.1% and 14.5%, respectively.

Series overview

With Chipotle’s second-quarter earnings around the corner, we’ll look at analysts’ revenue and EPS expectations. We’ll also cover the management’s guidance for 2018 and analysts’ estimates for the next four quarters. Finally, we’ll look at the company’s valuation multiple and analysts’ recommendations.

Let’s start by looking at analysts’ revenue estimates.

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