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Chipotle (CMG) to Report Q2 Earnings: What's in the Offing?

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Chipotle Mexican Grill, Inc. (CMG - Free Report) is scheduled to report second-quarter 2021 results on Jul 20. In the last reported quarter, the company delivered an earnings surprise of 8.9%.

How Are Estimates Placed?

The Zacks Consensus Estimate for second-quarter earnings is pegged at $6.46, indicating growth of 1,515% from 40 cents registered in the year-ago quarter.

For revenues, the consensus mark is pegged at nearly $1,875 million that suggests increase of 37.4% from the prior-year quarter’s figure.

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

Chipotle Mexican Grill, Inc. Price and EPS Surprise


Chipotle Mexican Grill, Inc. Price and EPS Surprise

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


Factors at Play

Chipotle's second-quarter performance is likely to have benefitted from initiatives involving disciplined approach to creativity and innovation as well as leveraging digital capabilities to drive productivity and expand access, convenience and engagement. To this end, the transition of the company’s digital ecosystem from a commerce system to a platform of engagement through enhancements in app, website and group offerings are encouraging. Moreover, the idea of leveraging digital scale and removing operational friction with respect to its digital kitchen is likely to have driven second-quarter performance. Given the initiatives, the company expects its trailing 12-month average unit volumes to pass $2.4 million in the second quarter.

Meanwhile, Chipotle's second-quarter top line is likely to reflect an improvement in comps on the back of healthy demand for Carne Asada, rise in delivery menu prices, normalizing quesadilla incidents and lower marketing investments. The company expects second-quarter comps in the range of high 20-30%.

This along with focus on Chipotlane add-ons, alternative store formats, digital-only menu offerings and Chipotle rewards is likely to have boosted the company’s performance in the to-be-reported quarter.

However, rise in menu items such as avocado along with a surge in delivery and service fees are likely to have hurt margins in the second quarter. Food costs for the quarter is expected to be in mid to high 30% range.

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 +5.53%. 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.

Stocks Poised to Beat Earnings Estimates

Here are some other stocks from the Zacks Retail-Wholesale space that investors may consider as our model shows that these also have the right combination of elements to post an earnings beat this quarter:

Papa John's International, Inc. (PZZA - Free Report) currently carries a Zacks Rank #2 and has an Earnings ESP of +6.56%.

BJ's Restaurants, Inc. (BJRI - Free Report) carries a Zacks Rank #2 and has an Earnings ESP of +8.51%.

Chuy's Holdings, Inc. (CHUY - Free Report) carries a Zacks Rank #2 and has an Earnings ESP of +1.02%.

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