Chipotle’s Earnings To Be Just Above Consensus?
Chipotle (NYSE: CMG) is scheduled to report its fiscal Q1 2021 results on Wednesday, April 21. We expect Chipotle to beat the consensus estimates for revenues and earnings. The company has reported better than expected revenues figures in each of the last four quarters. The company did better than its peers during the pandemic as it had been investing in digital technology for a couple of years so the transition was seamless. We expect the same to drive the first-quarter FY2021 results as well.
Our forecast indicates that Chipotle’s valuation is around $1643 per share, which is 7% above the current market price of around $1540. Look at our interactive dashboard analysis on Chipotle’s pre-earnings: What To Expect in Q1? for more details.
(1) Revenues expected to be ahead of consensus estimates in Q1
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Trefis estimates Chipotle’s fiscal Q1 2021 revenues to be around $1.75 billion, 1.1% above the $1.73 billion consensus estimate. Chipotle revenues of $6 billion for the full year 2020 were ahead of the 2019 figure, despite the pandemic forcing restaurants to close down and function in takeaway or delivery mode only. The top-line benefited in 2020 from significant growth in digital sales. We expect the same momentum to continue in the first quarter of FY2021. Overall, we expect revenue of around $7.2 billion in FY2021. Our dashboard on Chipotle’s revenues offers more details on the company’s segments.
(2) EPS likely to beat the consensus estimates
Chipotle’s Q1 2021 earnings per share (EPS) is expected to be $4.80 per Trefis analysis, just above the consensus estimate of $4.78. The company’s net income margin fell in 2020 due to higher operational expenses but higher revenue led to a higher net income as compared to the previous year. This increased the EPS figure from $12.38 to $12.52. The reopening of the restaurants, reduction in curbs, and lower operational expenses are expected to improve the earnings in 2021. Altogether, the company is likely to report an EPS of around $19.64 in FY2021.
(3) Stock price estimate 7% above the current market price
Going by our Chipotle’s valuation, with an EPS estimate of around $19.64 and a P/E multiple of just above 83x in fiscal 2021, this translates into a price of $1643, which is 7% above the current market price of around $1540.
Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year
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