What Analysts Expect from Chipotle’s Q4 2018 EPS



Analysts’ expectations

Analysts expect Chipotle Mexican Grill’s (CMG) EPS growth to be flat in the fourth quarter. They expect the company to post adjusted EPS of $1.34, the same as in the corresponding quarter of 2017. 

Analysts expect a contraction in the company’s net margin to offset its revenue gains, leading to flat EPS growth in the quarter.

Analysts expect Chipotle’s net margin to contract tp 3.2% in the fourth quarter from 3.4% in the corresponding quarter of 2017. Increased labor, marketing, and general and administrative expenses and higher effective tax rates are likely to lower the company’s net margin during the quarter. However, some of the fall is expected to be offset by sales leverage due to positive SSSG (same-store sales growth) and lower food costs as the supply of avocados shifts back to Mexico, Peru, and Chile.

Transformation charges and an additional noncash debt write-off are expected to increase the company’s effective tax rate to 34.9% compared to 28.5% in the fourth quarter of 2017.

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Peer comparison

During the same period, McDonald’s (MCD) is expected to post EPS growth of 10.4%, while Shake Shack’s (SHAK) EPS are likely to fall 69.2%.

Next, we’ll look at analysts’ recommendations ahead of Chipotle’s fourth-quarter earnings results.


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