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Chipotle: Analysts Expect Its Earnings to Rise in 2019

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Jun. 5 2019, Updated 11:54 a.m. ET

Analysts’ estimates

Analysts expect Chipotle Mexican Grill’s (CMG) EPS to grow at a higher rate in 2019 compared to a rise of 37.3% in 2018. For 2019, analysts expect Chipotle to post an adjusted EPS of $13.05, which represents a rise of 44.1% from $9.06 in 2018.

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EPS drivers

Chipotle’s revenue growth, expanded EBIT margin, and lower effective rate will likely drive Chipotle’s EPS growth in 2019. Analysts expect Chipotle’s EBIT margin to improve from 7.2% in 2018 to 8.8% in 2019. Increased menu prices, sales leverage from positive SSSG (same-store sales growth), and savings from the efficient sourcing process are expected to improve Chipotle’s EBIT margin this year. However, increased food and paper costs, wage inflation, and higher marketing expenses will likely offset some of the expansion in the EBIT margins in 2019.

In 2019, analysts expect Chipotle’s effective tax rate to be 26.2% compared to 29.4% in 2018. Chipotle repurchased $52.4 million worth of shares in the first quarter. By the end of the first quarter, the company had ~$105 million available under its share repurchase program. Share repurchases will likely contribute to the company’s EPS growth by lowering the number of shares outstanding.

Peer comparisons

For the same period, analysts expect McDonald’s (MCD) to post EPS growth of 1.8%.  Shake Shack’s (SHAK) EPS is expected to fall 19.5%.

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