Chipotle Mexican Grill Q4 2017 Earnings Preview
Chipotle Mexican Grill (NYSE: CMG) will announce its Q4 and full year 2017 results on February 6th 2018 and as the company struggles to regain its reputation after a major E. coli virus outbreak in 2015, several isolated incidents which are blown up on social media are impacting the company negatively. (Read Chipotle’s Nightmare With Negative Publicity Continues). In the company’s Q4 2017 earnings we will be keenly watching for the company’s comparable sales growth figures and expansion targets for 2018.
Below is a summary of the company’s quarterly revenue and EPS (earnings per share) for the first three quarters of 2017 and consensus analyst expectations for Q4 2017:
- Rising 25% Year To Date, Will Q1 Results Drive Chipotle Stock Higher?
- Up 11% Already This Year, Does Chipotle Stock Have More Room To Run After Q4 Results?
- Up 30% This Year, Will Chipotle Stock Rally Further Following Q3 Results?
- What To Expect From McDonald’s Stock Post Q2 Results?
- Chipotle’s Stock Up 50% Over Six Months. What’s Next?
- Chipotle Stock Looks Attractive at $1552
You can click here to access these charts and modify the expectations for Q4 2017.
Key Trends:
Positive Industry Environment: The overall restaurant industry environment has been positive for the quarter ended December 2017. While comparable traffic declined, comparable sales have been positive on the back of higher average checks. Fine dining and upscale casual restaurants are more likely to benefit from this trend. Given Chipotle’s issues and customer perception around its food (loss of confidence due to a food virus in 2015 and several subsequent isolated incidents) this positive environment is not likely to impact the company significantly.
New Leadership: Chipotle is looking for a new CEO as its founder Steve Ellis has now assumed the role of the company’s Executive Chairman. Operational issues including the inability to manage restaurant level issues are the core cause of the company’s concerns and a seasoned professional can potentially help in a turnaround. (Read Can A New CEO Turn Chipotle Around?)
Food Innovation, Door Delivery: Chipotle has been working on initiatives to introduce new and popular food items in its menu, however its experiment with the much in demand queso sauce did not meet with much success. Competitors such as McDonald’s are looking at home delivery to drive sales, especially during evenings, and this strategy can help Chipotle, too. The company is offering free delivery during the Super Bowl weekend through its partnership with Postmates and it can potentially do more in this space. (Read Should Chipotle Mexican Grill Double Down On Home Delivery?)
Positive Impact Of The Change In Tax Laws: Change in the tax laws in the U.S. is likely to impact Chipotle Mexican Grill positively, and as lower taxes increase the cash flows for the company, it can spend more on marketing and promotions without impacting its margins adversely. (Read Here’s Why The New Proposed Corporate Tax Regime Can Impact Chipotle Mexican Grill Significantly)
Chipotle’s fragile reputation is likely to continue impacting its results in Q4 2017. We will be keenly watching its comparable sales growth and any specific measures announced by the company to drive revenues in 2018.
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