Chipotle Mexican Grill (NYSE: CMG) is set to report its Q1 2017 earnings on April 25th 2017. After an extremely difficult 2016, the company is beginning to show signs of improvement as its efforts towards better food safety and promotions to attract customers have started showing results. In the last one month the company’s stock price registered a more than 15% increase and we believe this is in anticipation of better than expected results. Below is a summary of consensus estimates for Chipotle for Q1 2017:
Source: Yahoo Finance
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This is in line with our estimates of higher revenues and EPS as the company recovers from the E-coli scandal.
These include the roll out of smarter pick up times technology to reduce wait times for customers. (Read Can Shorter Wait Times Benefit An Ailing Chipotle Mexican Grill?). It appears that its continuous measures to regain customer confidence are paying off and the company regained its top spot as the best U.S. Mexican Chain, according to Market Force’s survey. (Read Are Chipotle’s Food Safety Efforts Finally Paying Off?).
However, the proposed tax on goods imported from Mexico and heavy spends on promotion and food safety can put pressure on Chipotle’s margins impacting its EPS negatively.
The overall weakness in the restaurant industry continues and according to insights from Black Box intelligence, which are based on weekly sales data from over 145 restaurant brands, the first quarter of 2017 has not been very encouraging for the restaurant industry. Comparable sales and traffic have declined year on year in both February and March, with January being the only exception, reporting flat comp growth year on year.
Chipotle’s Q1 2017 results are likely to set the trend for this year and give a strong indication on whether the company is on a recovery path. Most analysts expect the company to report a significant increase in revenues and EPS and the market survey confirms that the company is on the verge of a turnaround. This quarter could mark the beginning of new positive innings for Chipotle. Below is a summary of Chipotle’s key operating metrics for the last four quarters:
For further details on the company See Our Complete Analysis For Chipotle Mexican Grill
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