Chipotle’s EPS growth
For the first three quarters in 2018, Chipotle Mexican Grill (CMG) posted an adjusted EPS of $7.16—36.4% growth from $5.25 in the same three quarters in 2017. The EPS growth was driven by revenue growth, the expanded net margin, and share repurchases.
During this period, Chipotle’s net margin improved to 5.5% from 3.9% in the same three quarters in 2017. The expansion was driven by a decline in food beverage and packaging costs, other operating costs, and a lower effective tax rate. However, increased labor costs, general and administrative expenses, and depreciation and amortization expenses offset some of the net margin expansion.
For the fourth quarter, analysts expect Chipotle to post an adjusted EPS of $1.31 to take the total for 2018 to $8.52, which represents 29.0% growth from $6.60 in 2017.
Analysts’ 2019 EPS expectations
For 2019, analysts expect Chipotle to post an adjusted EPS of $11.95, which represents 40.3% growth from $8.52 in 2018. The revenue growth, expanded net margin, and share repurchases will likely drive the company’s EPS.
Analysts expect Chipotle’s net margin to improve from 4.9% in 2017 to 6.3%. The expansion is expected to be driven by the improved gross margin, lower selling, general, and administrative expenses, and a lower effective tax rate.
During the same period, Shake Shack and McDonald’s are expected to post EPS growth of 7.1% and 6.2%, respectively.