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Chipotle (CMG) Q4 Earnings: Is a Disappointment in Store?
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Chipotle Mexican Grill, Inc. (CMG - Free Report) is scheduled to report fourth-quarter 2016 results on Feb 2, after the market closes.
Last quarter, Chipotle posted a negative earnings surprise of 50.00%. Moreover, the trailing four-quarter average earnings surprise stands at a negative 6.74%.
Let’s see how things are shaping up for this announcement.
Chipotle Mexican Grill, Inc. Price and EPS Surprise
Despite various food-safety initiatives, Chipotle earnings and revenues have been suffering over the past few quarters. The hardships are mainly due to the negative publicity surrounding the E.coli and norovirus outbreaks since year-end 2015. In fact, comps have declined in each of the trailing four quarters, with an average decrease of over 23%. For the fourth quarter, the company expects comps to decline in the low single digits, given soft year-over-year comparison.
Meanwhile, Chipotle’s recovery plan to restore its economic model and customers trust toward building sales coupled with its efforts in enhancing guest experience augur well. Moreover, various sales-building initiatives undertaken by the company like menu innovation, increased brand marketing and investments in technology-driven initiatives, should aid in bringing back customers as well as boost quarterly results.
Still, costs associated with marketing and promotional initiatives to connect with its customers and higher labor expenses are likely to continue hampering the quarter’s profitability. Additionally, a soft consumer spending environment in the U.S. restaurant space is expected to limit revenue growth of the company.
Earnings Whispers
Our proven model does not conclusively show that Chipotle is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: Chipotle has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 54 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Chipotle has a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies to consider from the Zacks categorized Retail–Restaurants industry, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Yum! Brands, Inc. (YUM - Free Report) has an Earnings ESP of +2.82% and a Zacks Rank #3.
BJ's Restaurants, Inc. (BJRI - Free Report) has an Earnings ESP of +2.50% and a Zacks Rank #3.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
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Chipotle (CMG) Q4 Earnings: Is a Disappointment in Store?
Chipotle Mexican Grill, Inc. (CMG - Free Report) is scheduled to report fourth-quarter 2016 results on Feb 2, after the market closes.
Last quarter, Chipotle posted a negative earnings surprise of 50.00%. Moreover, the trailing four-quarter average earnings surprise stands at a negative 6.74%.
Let’s see how things are shaping up for this announcement.
Chipotle Mexican Grill, Inc. Price and EPS Surprise
Chipotle Mexican Grill, Inc. Price and EPS Surprise | Chipotle Mexican Grill, Inc. Quote
Factors Likely to Influence this Quarter
Despite various food-safety initiatives, Chipotle earnings and revenues have been suffering over the past few quarters. The hardships are mainly due to the negative publicity surrounding the E.coli and norovirus outbreaks since year-end 2015. In fact, comps have declined in each of the trailing four quarters, with an average decrease of over 23%. For the fourth quarter, the company expects comps to decline in the low single digits, given soft year-over-year comparison.
Meanwhile, Chipotle’s recovery plan to restore its economic model and customers trust toward building sales coupled with its efforts in enhancing guest experience augur well. Moreover, various sales-building initiatives undertaken by the company like menu innovation, increased brand marketing and investments in technology-driven initiatives, should aid in bringing back customers as well as boost quarterly results.
Still, costs associated with marketing and promotional initiatives to connect with its customers and higher labor expenses are likely to continue hampering the quarter’s profitability. Additionally, a soft consumer spending environment in the U.S. restaurant space is expected to limit revenue growth of the company.
Earnings Whispers
Our proven model does not conclusively show that Chipotle is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: Chipotle has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 54 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Chipotle has a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies to consider from the Zacks categorized Retail–Restaurants industry, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Carrols Restaurant Group, Inc. (TAST - Free Report) has an Earnings ESP of +16.67% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here
Yum! Brands, Inc. (YUM - Free Report) has an Earnings ESP of +2.82% and a Zacks Rank #3.
BJ's Restaurants, Inc. (BJRI - Free Report) has an Earnings ESP of +2.50% and a Zacks Rank #3.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>