Chipotle Mexican Grill, Inc. CMG is scheduled to report its fourth quarter results Feb. 6, and investors are expecting an update to the company's search for a new CEO to replace Steve Ells.
The Analyst
William Blair's Sharon Zackfia maintains a Market Perform rating on Chipotle Mexican Grill's stock.
The Thesis
Chipotle's earnings per share is likely to fall short of the $1.38 per share the consensus estimates is calling for, Zackfia said in a note. The company is projected to earn $1.05 per share in the quarter and report a low-single-digit comp decline (and a mid-single-digit traffic decline), which also falls short of the consensus estimate calling for a 1.5 percent gain.
Zackfia said Chipotle's below consensus quarter could be attributed to more difficult comparisons as the quarter progressed, a moderation of queso sales after the initial trial period in September and October, and reports in December of an illness associated with a California-based store.
The restaurant chain is likely to reiterate its 2018 guidance of opening 130 to 150 new stores, which implies a 5 to 6 percent unit growth. This would mark a decrease from the 7 to 8 percent growth seen in 2017 as management is focusing on various operational changes to improve training, integration, new restaurant openings, and other factors.
In terms of financial guidance, the ongoing search for a new CEO makes it unclear how much additional guidance will be provided, Zackfia said. The appointment of a new CEO will ultimately prove to be a "positive catalyst" and accelerate the company's turnaround. But until this is confirmed, investors could expect to see "significant near-term uncertainty."
Price Action
Shares of Chipotle were trading lower by nearly 4 percent Monday at $331.46.
Steve Ells Returns To Sole Chipotle CEO Role; What Should We Expect?
An Early Wall Street Reaction To Chipotle's CEO Announcement
Image credit: Chis Potter, Flickr
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.