Chipotle (CMG) Gears Up to Report Q1 Earnings: What to Expect?

24 Apr 2024

Yahoo Finance

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Chipotle CMG Gears Up to Report Q1 Earnings What to Expect

Chipotle's (CMG) first-quarter top line is likely to have benefited from digital initiatives, new restaurant openings and targeted marketing campaigns.

Chipotle Mexican Grill, Inc. CMG is scheduled to report first-quarter 2024 results on Apr 24. In the last reported quarter, the company delivered an earnings surprise of 6.5%.

How Are Estimates Placed?

The Zacks Consensus Estimate for first-quarter earnings is pegged at $11.56, indicating growth of 10.1% from $10.5 registered in the year-ago quarter.

For revenues, the consensus mark is pegged at nearly $2.7 billion, suggesting an increase of 12.8% from the prior-year quarter’s figure.

Chipotle Mexican Grill, Inc. Price and EPS Surprise

Chipotle Mexican Grill, Inc. price-eps-surprise | Chipotle Mexican Grill, Inc. Quote

Let’s discuss the factors that are likely to be reflected in the quarter to be reported.

Factors at Play

Chipotle's first-quarter top line is expected to increase year over year, courtesy of its digital initiatives, Chipotlane add-ons and new restaurant openings. This and the focus on leveraging customer data and insights to develop more tailored marketing campaigns are likely to have boosted customer frequency and engagement in the to-be-reported quarter.

The introduction of new menu items is likely to have driven transactions in the first quarter. Our model predicts first-quarter food and beverage revenues to increase 12.2% year over year to $2.6 billion. Delivery service revenues are expected to be $18.2 million, suggesting an increase of 3.5% year over year.

Strong comps growth, backed by transaction growth and marketing efforts, is likely to have aided the company’s top line in the first quarter. Our model predicts first-quarter comps growth to be at 4.7% year over year.

Elevated costs concerning avocados and tortillas and wage pressures are likely to have hurt margins in the first quarter. CMG anticipates the cost of sales to be in the low 29% range in the first quarter, while labor costs are expected in the low 25% range. Other operating costs are expected to be in the high 14% range.

Our model predicts food, beverage and packaging costs to be $775 million, up 11.9% year over year. Per the model, labor costs are expected to increase 14.4% year over year to $668.1 million. Our model predicts a restaurant-level margin of 25.5%.

What Our Model Says

Our proven model predicts an earnings beat for Chipotle this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: Chipotle has an Earnings ESP of +1.86%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

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Other Stocks Poised to Beat on Earnings

Here are some other stocks worth considering from the Zacks Retail-Wholesale sector that investors may consider, as our model shows that these have the right combination of elements to post an earnings beat.

Wingstop Inc. WING has an Earnings ESP of +6.20% and a Zacks Rank #2.

The company's shares have increased 38.9% so far this year. WING’s earnings beat estimates in each of the trailing four quarters, the average surprise being 21.3%.

Shake Shack Inc. SHAK has an Earnings ESP of +18.18% and a Zacks Rank #3.

Shares of SHAK have gained 28.5% so far this year. SHAK’s earnings beat estimates in each of the trailing four quarters, the average surprise being 92.6%.

Restaurant Brands International Inc. QSR has an Earnings ESP of +0.33% and a Zacks Rank of 3.

Shares of QSR have declined 8.6% so far this year. It reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 10.2%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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