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Robust Comps Growth to Aid Chipotle's (CMG) Q2 Earnings

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Chipotle Mexican Grill, Inc. (CMG - Free Report) is scheduled to report second-quarter 2022 results on Jul 26. In the last reported quarter, the company delivered an earnings surprise of 1.2%.

How Are Estimates Placed?

The Zacks Consensus Estimate for second-quarter earnings is pegged at $9.03, indicating growth of 21.1% from $7.46 registered in the year-ago quarter. In the past 7 days, earnings estimate for the current quarter has been revised downward by 2 cents.

For revenues, the consensus mark is pegged at nearly $2.24 billion, suggesting an increase of 18.6% from the prior-year quarter.

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

Factors at Play

Chipotle's second-quarter performance is likely to have benefited from robust comps growth, introduction of new menu items and increased focus on Chipotlane. For 2022, the company expects comps growth in the range of 10-12%.

The company is also benefiting from the expansion of its digital program. The company is leaving no stone unturned to make digital ordering more efficient for its restaurants and appealing to customers, with the aim of retaining them amid the coronavirus crisis. In this regard, Chipotle has redesigned and simplified its online ordering site, enabled online payment for catering and online meal customizations, and collaborated with several well-known third-party providers for delivery.

Increased focus on Chipotlane add-ons, alternative store formats and increased technological investments (to amplify innovation, enhance customer experience, optimize efficiencies and improve operational execution) are likely to have driven the company’s performance in the to-be-reported quarter.

The Zacks Consensus Estimate for food and beverage revenues is pegged at $2.2 billion, up 19.1% year over year. On the other hand, the consensus estimate for delivery revenues stands at $23.7 million compared with $23.2 billion in the prior-year quarter.

However, wage inflation and costs associated with beef, avocado and paper are likely to have hurt margins in the second quarter. The company anticipates labor costs in the mid-24% range on account of leverage from menu price increases and seasonally higher sales.

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 +0.46%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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

Other Stocks Poised to Beat Estimates

Here are some other stocks worth considering from the Zacks Retail-Wholesale space as our model shows that these too have the right combination of elements to beat on earnings this season:

Ulta Beauty, Inc. (ULTA - Free Report) has an Earnings ESP of +2.46% and a Zacks Rank #1.

Shares of Ulta Beauty have increased 20% in the past year. ULTA earnings beat the consensus mark in each of the trailing four quarters. The company has a trailing four-quarter earnings surprise of 49.8%, on average.

Domino's Pizza, Inc. (DPZ - Free Report) has an Earnings ESP of +1.26% and a Zacks Rank #3.

Shares of Domino's have declined 13.6% in the past year. DPZ’s earnings beat estimates in two of the trailing four quarters and missed twice, the negative average surprise being 1.62%.

Burlington Stores, Inc. (BURL - Free Report) has an Earnings ESP of +22.50% and a Zacks Rank #3.

Shares of Burlington Stores have declined 53.8% in the past year. BURL’s earnings beat estimates in two of the trailing four quarters and missed twice, the negative average surprise being 0.6%.

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