Chipotle’s Stock Has Moderate Growth Potential Post Q2 Earnings

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Trefis
CMG: Chipotle Mexican Grill logo
CMG
Chipotle Mexican Grill

Chipotle (NYSE: CMG) is scheduled to report its fiscal Q2 2021 results on Wednesday, July 21. We expect Chipotle to beat the consensus estimates for revenues and earnings. The company has reported better than expected revenues and earnings figures in three 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 growth to continue in the second-quarter FY2021 results.

Our forecast indicates that Chipotle’s valuation is around $1710 per share, which is 8% above the current market price of around $1582. Look at our interactive dashboard analysis on Chipotle’s pre-earnings: What To Expect in Q2? for more details. 

(1) Revenues expected to be ahead of consensus estimates in Q2

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Trefis estimates Chipotle’s fiscal Q2 2021 revenues to be around $1.89 billion, just above the $1.88 billion consensus estimate. Chipotle’s Q1 2021 revenue grew by 23% to $1.74 billion as robust demand continued with digital sales accounting for 50.1% of total sales. We expect the same momentum to continue in the second quarter of FY2021. Overall, we expect revenue of around $7.4 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 Q2 2021 earnings per share (EPS) is expected to be $6.50 per Trefis analysis, just above the consensus estimate of $6.47. The company’s net income margin fell in 2020 due to higher operational expenses but increased revenue led to a higher net income as compared to the previous year. The reopening of restaurants, reduction in lockdown curbs, and lower operational expenses are expected to improve the earnings in 2021. Altogether, the company is likely to report an EPS of around $20.46 in FY2021.

(3) Stock price estimate 8% above the current market price

Going by our Chipotle’s valuation, with an EPS estimate of around $20.46 and a P/E multiple of 83.6x in fiscal 2021, this translates into a price of $1710, which is 8% above the current market price of $1582.

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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