The U.S. chain of fast-casual restaurants Chipotle Mexican Grill (CMG, Financial) is scheduled to place its earnings on April 25 after the market closes. With Brian Niccol taking over as the CEO and Chris Brandt as the chief marketing officer of the company, it is expected that the company is ready to post strong first-quarter earnings. As we inch closer towards Chipotle’s first-quarter financial results, let’s take a closer look at what to expect from the company’s earnings.
Bird’s-eye view
Twelve analysts have come up with earnings per share ranging from $1.34 to $1.75. Zacks estimates full-year earnings per share to come in around $8.24. As for the first quarter, it is expected that the company’s earnings before interest and taxes margins would decline to 5.6% from 6.8% in 2017. The expected decrease in EBIT margin is due to increase in labor and general and administrative expenses.
As a result of change in the U.S. tax laws, the analysts expect Chipotle’s effective tax rate to be 30.8% in the first quarter.
Chipotle is expected to see revenue growth of 7.3% on a year-over-year basis to $1.15 billion. Last year, the company’s first-quarter revenue stood at $1.07 billion. The fact that the company opened many new outlets during the quarter is what makes the company believe that its revenue will be on the rise this quarter.
Operating expenses are expected to remain flat from last year’s first quarter as savings from marketing and promotional costs will somewhat compensate for the increase in maintenance and repair expenses. Furthermore, Chipotle’s general and administrative expenses is projected to be around $330 million for the whole year.
Future prospect
In the coming four quarters, the analysts expect the fast casual chain to record revenue of $4.84 billion. On a positive note, the company will also open 130-150 new restaurants in this year. The company has set its comps guidance at low single digits. It has taken several steps to augment customer expierience like menu innovations, digital expansion and employee training. This will increase the company’s cost but if the same does not lead to a proportionate increase in revenue, the company’s bottom line and earnings can go down.
With that said, it’s time to wait and watch for Chipotle’s earnings, which will give us a better idea of where the company stands.
Disclosure: I do not hold any position in the stock mentioned in this article.
