Will Chipotle Beat Consensus For FY 2019?

by Trefis Team
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Chipotle
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Chipotle Mexican Grill (NYSE: CMG) is slated to release its Q4 and full-year 2019 results on February 4, 2020. We believe that Chipotle’s Revenues and earnings will beat consensus. We expect Chipotle to report revenues of $70.6 billion (vs. consensus estimate of $70.5 billion), which would be 26.4% higher than the previous year. Earnings are likely to be around $7.04 (vs. consensus estimate of $6.41), lower than $7.57 reported in 2018, due to a much lower net income margin. We believe that stronger-than-expected revenues and earnings for FY 2019 will likely result in a slight positive movement in Chipotle’s stock price once earnings are announced. In fact, our forecast indicates that Chipotle’s Valuation is $892 per share, which is slightly higher than its current market price of roughly $880.

A] Revenue Expected To Beat Consensus

  • Total revenues has increased from $4.5 billion in 2016 to $4.9 billion in 2018.
  • Trefis estimates Chipotle’s revenues to improve further by 14.1% to $5.6 billion in 2019 from $4.9 billion in 2018.
  • Revenue improvement is expected to be driven by both increasing restaurants and increase in average revenue per restaurant.

A separate interactive dashboard for Chipotle provides an in-depth view of Chipotle’s revenue trend and segment-wise revenue performance, along with forecast for 2019 and 2020.

B] EPS To Be Higher Than Expected

  • Chipotle’s 2019 earnings per share (EPS) is expected to be $14.43 per Trefis analysis, higher than the consensus estimate of $13.93 per share.
  • A high increase in Total income pushed by a slower increase in expense will drive the EPS increase compared to 2018.
  • As we forecast Chipotle’s Revenues to improve and Expenses to increase slowly in 2019 (14.1% vs 9.7%), this will result in an improvement in Chipotle’s Net Income Margin figure from 3.6% in 2018 to 7.3% in 2019.

C] Stock Price Estimate Higher than Market Price

  • A trailing P/E multiple of 61.8x looks appropriate for Chipotle’s stock, which is lower than the current implied P/E multiple of 63.2x.
  • As per Trefis, Chipotle’s 2019 revenue and earnings will be higher than the market expectations. This forecast works out to a fair value of $892 for Chipotle’s stock, which is slightly higher than its current market price of around $880.

Additionally, you can input your estimates for Chipotle’s key metrics in our interactive dashboard for Chipotle’s pre-earnings, and see how that will affect the company’s stock price.

 

 

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