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An Early Preview of Chipotle's (CMG) Q1 Earnings Outlook

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With Chipotle’s (CMG - Free Report) new CEO Brian Niccol at the helm, the first quarter could mark the start of a better era for the embattled fast casual chain. But before investors get too caught up in what Niccol might change long-term, they should look at what to expect from Chipotle’s upcoming first quarter financial results.

Chipotle’s new chief executive, and the former head of Yum Brands’ (YUM - Free Report) Taco Bell didn’t officially take over until early March. This means that any business innovations Niccol might have already implemented won’t have much impact on Chipotle’s Q1 earnings results.

Furthermore, amid this volatile market, investors should focus on finding stocks that are expected to post strong earnings results and avoid ones that aren’t.

With that said, let’s take a look at what to expect from Chipotle as we inch closer to its first quarter earnings report.

Outlook & Valuation

Chipotle’s Q1 revenues are projected to climb by 7.4% to reach $1.15 billion, based on our current Zacks Consensus Estimates. Meanwhile, the restaurant chain is expected to report quarterly earnings of $1.53 per share, which would mark a 4.4% decline from the year-ago period.

Investors should also note that Chipotle has earned four earnings estimate revisions, with 100% agreement to the downside, all within the last 60 days. However, the company’s Most Accurate Estimate is $1.55 per share. This means that estimates have come in higher as we get closer to Chipotle’s Q1 earnings.

Chipotle is currently trading with a Forward P/E of 36.1, which marks a substantial premium to the “Retail – Restaurants” industry’s average of 22.4.

Price Performance and Surprise History

Another important factor that investors might want to consider ahead of Chipotle’s Q1 earnings report is the company’s history of earnings surprises and the effect that these surprises have had on share prices.

Chipotle Mexican Grill, Inc. Price, Consensus and EPS Surprise

Chipotle Mexican Grill, Inc. Price, Consensus and EPS Surprise | Chipotle Mexican Grill, Inc. Quote

We can see that Chipotle’s earnings surprise history has been up and down over the last few years, which is to be expected amid a rough time for the company. It is also worth noting that Chipotle’s stock price has been highly volatile immediately following the release of its quarterly earnings results. In fact, over the last six periods, Chipotle stock has sunk in the near-term four times.

With that said, past performance does not necessarily indicate future success or failure, and we will have a better idea of where Chipotle stands closer to its report date, which is scheduled for April 25.

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