Chipotle To Maintain Momentum In Q2 2019?

by Trefis Team
-8.69%
Downside
817
Market
746
Trefis
CMG
Chipotle
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Chipotle Mexican Grill (NYSE: CMG), an American chain of fast casual Mexican restaurants, is set to announce its Q2 2019 results on July 23, 2019 followed by a conference call with analysts. The market expects the company to report revenue close to $1.4 billion in Q2 2019, which would be an increase of 11% on a year-on-year basis. The increase is mainly expected due to the rising digital sales and continuous addition of new restaurants. Market expectation is for the company to report earnings of $3.76 per share in Q2 2019, higher than the $2.87 per share in the year-ago period.

Chipotle Revenues were reported at $4.9 billion in 2018. This was earned from company operated restaurants, primarily in the USA.

We have summarized our key expectations from the earnings announcement in our interactive dashboard – Chipotle’s Earnings: Performance and 2019 Forecast. In addition, here is more Consumer Discretionary data.

Key Factors Affecting Earnings:

Revenue to continue growth:

  • After the E. coli outbreak in 2016, the company is back on a growth phase with revenues rising steadily in 2017 and 2018. In Q1 2019 the revenue grew further to $1.3 billion, up by 13.9% year on year.
  • The restaurant growth is instrumental to the growth of revenue along with the average revenue per restaurant. Trefis estimates average number of restaurants to be more than 2,550 by the end of 2019.

Trend in Expenses:

  • Restaurant operating costs (Food, beverage & packaging, Labor and Occupancy) contributes around 70% of the cost. The Total Expenses thus changes mostly in line with the revenue.
  • We expect the Indirect and other expenses to be lower in 2019 as the company is focusing on Operating efficiency which is also expected to improve EBITDA margins.

Full Year Outlook:

  • For the full year, we expect gross revenue to increase by 12.2% to $5.4 billion, driven primarily by rising comparable sales and continuous addition of new restaurants.
  • EBITDA margin is expected to increase further to 17.2%.

 

Trefis calculates Chipotle’s Valuation at $684 per share for Chipotle’s stock. The value is based on the expectation that the company’s revenue and earnings will continue to see a growth over the coming years.

 

 

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