Chipotle (CMG) earnings preview: Strong comp sales to drive growth in Q3

Chipotle Mexican Grill (NYSE: CMG) will report earnings results for the third quarter of 2019 on Tuesday, October 22, after the market closes. Analysts estimate earnings of $3.19 per share on revenue of $1.38 billion.

Chipotle had a tough time last year with food safety issues but the company seems to have overcome its hurdles. The burrito chain has managed to deliver strong revenues, profits and comp sales all through this year.

The main focus for the third quarter will be on the comparable store sales trend. Over the last two quarters, comp sales have seen good growth helped by increases in transactions and revenue per check. This growth could continue in the third quarter.

Chipotle’s strategy of expanding its store footprint and improving its digital and delivery capabilities is likely to pay off in terms of generating higher comp store sales. The changes in menu offerings coupled with price increases can also contribute in driving growth. All in all, Chipotle appears poised for another strong quarter.

In the second quarter of 2019, Chipotle beat revenue and earnings estimates. Revenues rose 13% year-over-year to $1.43 billion and adjusted EPS grew 39% to $3.99. Digital sales doubled and accounted for 18% of sales in the second quarter.

Also read: Coca-Cola Q3 2019 Earnings Report

For fiscal 2019, Chipotle anticipates high single-digit comparable restaurant sales growth. The company has also guided for 140 to 155 new restaurant openings during this period.

Chipotle’s shares have gained 95% thus far this year and if the company beats estimates for the third quarter, the stock could see an uptick. The majority of analysts have rated the stock as Buy.

Chipotle’s competitor McDonald’s (NYSE: MCD) will also report earnings results on Tuesday. Analysts expect earnings of $2.21 per share on revenue of $5.4 billion.

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