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Chipotle (CMG) Gears Up to Report Q3 Earnings: What to Expect?
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Chipotle Mexican Grill, Inc. (CMG - Free Report) is scheduled to report third-quarter 2023 results on Oct 26. In the last reported quarter, the company delivered an earnings surprise of 3.3%.
How Are Estimates Placed?
The Zacks Consensus Estimate for third-quarter earnings is pegged at $10.49, indicating growth of 10.3% from $9.51 registered in the year-ago quarter.
For revenues, the consensus mark is pegged at nearly $2.5 billion, suggesting an increase of 11.2% from the prior-year quarter’s figure.
Chipotle Mexican Grill, Inc. Price and EPS Surprise
Let’s discuss the factors that are likely to get reflected in the quarter to be reported.
Factors at Play
Chipotle's third-quarter top line is expected to increase year over year, courtesy of Chipotlane add-ons, menu innovation and transaction-driving promotions. This and strength in digital sales, rise in menu prices and new restaurant openings are likely to have aided the company’s performance in the to-be-reported quarter.
Our model predicts third-quarter food and beverage revenues to increase 10.9% year over year to $2.4 billion. Delivery service revenues are expected to be $18.4 million, suggesting an increase of 3.4% year over year.
Strong comps growth backed by transaction growth and pricing efforts are likely to have aided the company’s top line in the third quarter. The company anticipates third-quarter comps to be in the low to mid-single-digit range. Our model predicts third-quarter comps growth to be at 3.6% year over year.
Elevated costs concerning beef and avocados, strategic investments in technology and wage pressures are likely to have hurt margins in the third quarter. CMG anticipates cost of sales to be around 30% range in the third quarter, while labor costs are expected at 25% range. Other operating costs are expected to be in the mid-14% range.
Our model predicts, food, beverage and packaging costs to be $739.3 million, up 11.6% year over year. Per the model, labor costs are expected to increase 11% year over year to $618.3 million. Our model predicts restaurant-level margin at 25.1% compared with 25.3% reported in the year-ago quarter.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for Chipotle this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that's not the case here.
Earnings ESP: Chipotle has an Earnings ESP of -0.60%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some stocks worth considering from the Zacks Retail-Wholesale sector that investors may consider, as our model shows that these have the right combination of elements to post an earnings beat.
Starbucks Corporation (SBUX - Free Report) has an Earnings ESP of +0.84% and a Zacks Rank #3.
Shares of SBUX have gained 12.5% in the past year. SBUX’s earnings beat estimates in three of the trailing four quarters and missed once, the average surprise being 7.31%.
Yum! Brands, Inc. (YUM - Free Report) has an Earnings ESP of +2.73% and a Zacks Rank #3.
Shares of the company have increased 9.2% in the past year. YUM’s earnings beat estimates in two of the trailing four quarters and missed twice, the average surprise being 2%.
McDonald's Corporation (MCD - Free Report) has an Earnings ESP of +1.10% and a Zacks Rank #3.
Shares of the company have declined 0.2% in the past year. MCD’s earnings beat estimates in all of the trailing four quarters, the average surprise being 9.5%.
Image: Bigstock
Chipotle (CMG) Gears Up to Report Q3 Earnings: What to Expect?
Chipotle Mexican Grill, Inc. (CMG - Free Report) is scheduled to report third-quarter 2023 results on Oct 26. In the last reported quarter, the company delivered an earnings surprise of 3.3%.
How Are Estimates Placed?
The Zacks Consensus Estimate for third-quarter earnings is pegged at $10.49, indicating growth of 10.3% from $9.51 registered in the year-ago quarter.
For revenues, the consensus mark is pegged at nearly $2.5 billion, suggesting an increase of 11.2% from the prior-year quarter’s figure.
Chipotle Mexican Grill, Inc. Price and EPS Surprise
Chipotle Mexican Grill, Inc. price-eps-surprise | Chipotle Mexican Grill, Inc. Quote
Let’s discuss the factors that are likely to get reflected in the quarter to be reported.
Factors at Play
Chipotle's third-quarter top line is expected to increase year over year, courtesy of Chipotlane add-ons, menu innovation and transaction-driving promotions. This and strength in digital sales, rise in menu prices and new restaurant openings are likely to have aided the company’s performance in the to-be-reported quarter.
Our model predicts third-quarter food and beverage revenues to increase 10.9% year over year to $2.4 billion. Delivery service revenues are expected to be $18.4 million, suggesting an increase of 3.4% year over year.
Strong comps growth backed by transaction growth and pricing efforts are likely to have aided the company’s top line in the third quarter. The company anticipates third-quarter comps to be in the low to mid-single-digit range. Our model predicts third-quarter comps growth to be at 3.6% year over year.
Elevated costs concerning beef and avocados, strategic investments in technology and wage pressures are likely to have hurt margins in the third quarter. CMG anticipates cost of sales to be around 30% range in the third quarter, while labor costs are expected at 25% range. Other operating costs are expected to be in the mid-14% range.
Our model predicts, food, beverage and packaging costs to be $739.3 million, up 11.6% year over year. Per the model, labor costs are expected to increase 11% year over year to $618.3 million. Our model predicts restaurant-level margin at 25.1% compared with 25.3% reported in the year-ago quarter.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for Chipotle this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that's not the case here.
Earnings ESP: Chipotle has an Earnings ESP of -0.60%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks Poised to Beat Earnings Estimates
Here are some stocks worth considering from the Zacks Retail-Wholesale sector that investors may consider, as our model shows that these have the right combination of elements to post an earnings beat.
Starbucks Corporation (SBUX - Free Report) has an Earnings ESP of +0.84% and a Zacks Rank #3.
Shares of SBUX have gained 12.5% in the past year. SBUX’s earnings beat estimates in three of the trailing four quarters and missed once, the average surprise being 7.31%.
Yum! Brands, Inc. (YUM - Free Report) has an Earnings ESP of +2.73% and a Zacks Rank #3.
Shares of the company have increased 9.2% in the past year. YUM’s earnings beat estimates in two of the trailing four quarters and missed twice, the average surprise being 2%.
McDonald's Corporation (MCD - Free Report) has an Earnings ESP of +1.10% and a Zacks Rank #3.
Shares of the company have declined 0.2% in the past year. MCD’s earnings beat estimates in all of the trailing four quarters, the average surprise being 9.5%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.