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Chipotle (CMG) to Report Q1 Earnings: What's in the Cards?

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Chipotle Mexican Grill, Inc. (CMG - Free Report) is scheduled to report first-quarter 2017 results on Apr 25, after market close.

Last quarter, Chipotle posted a positive earnings surprise of 1.85%. However, the trailing four-quarter average earnings surprise is pegged at a negative 10.60%.

Let’s see how things are shaping up for this announcement.

Factors Likely to Affect Q1 Results

Chipotle’s new brand-management efforts along with various sales-building initiatives like menu innovation, simplification of restaurant operations and increased brand marketing should aid in improving guest experience and reinstate customer affinity for the Chipotle brand. This in turn should drive its top- and bottom–line performance in the to-be-reported quarter.

Moreover, the completion of the rollout of “Smarter Pickup Times” technology to all its restaurants that offer digital ordering should further drive sales.

However, it is to be noted that the first quarter of 2017 should provide easy year-over-year comparisons as Chipotle was in the midst of its massive food-safety scandal this time last year.

Meanwhile, costs associated with marketing and promotional initiatives to connect with its customers, implementation of food safety measures and higher labor expenses are likely to continue thwarting the quarter’s profitability. Additionally, a soft consumer spending environment in the U.S. restaurant space is expected to limit revenue growth.

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 -7.81%. This is because the Most Accurate estimate stands at $1.18, while the Zacks Consensus Estimate is pegged higher at $1.28. 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 #3 which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.

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:

Restaurant Brands International Inc. (QSR - Free Report) has an Earnings ESP of +5.71% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Red Robin Gourmet Burgers, Inc. (RRGB - Free Report) has an Earnings ESP of +17.24% and a Zacks Rank #3.

Panera Bread Company (PNRA - Free Report) has an Earnings ESP of +2.21% and a Zacks Rank #3.

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