Factors Setting the Tone for Chipotle's (CMG) Q3 Earnings

Chipotle Mexican Grill, Inc. CMG is scheduled to report third-quarter 2020 results on Oct 21, after market close. In the last-reported quarter, the company delivered a negative earnings surprise of 21.6%.

How Are Estimates Trending?

The Zacks Consensus Estimate for third-quarter earnings is pegged at $3.38, indicating an 11.5% decline from $3.82 in the year-ago quarter. For revenues, the consensus mark stands at $1,587 million, suggesting growth of 13% from the prior-year quarter.

Let’s discuss factors that are likely to get reflected in the quarter to be reported.

Chipotle Mexican Grill, Inc. Price and EPS Surprise

Chipotle Mexican Grill, Inc. Price and EPS Surprise

Chipotle Mexican Grill, Inc. price-eps-surprise | Chipotle Mexican Grill, Inc. Quote

Factors at Play

The coronavirus pandemic is likely to have materially affected Chipotle’s third-quarter performance. Although majority of the company’s dining rooms are open, dismal footfall on account of the pandemic is likely to have impacted the company’s results in the quarter. This along with costs to support the company’s food safety program as well as labor requirements are likely to have weighed on the company’s margins in the to-be-reported quarter.

However, increased focus on new menu items, operational excellence, enhancement of guest experience, delivery services, technology-driven convenience as well as more aggressive brand marketing are likely to have driven the company’s top line in the third quarter. Also, hiked delivery menu prices are likely to have boosted margins in the quarter.

What Our Model Says

Our proven model predicts an earnings beat for Chipotle this time around as a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat estimates.

Earnings ESP: Chipotle has an Earnings ESP of +1.97%. 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 a few other stocks from the Zacks Retail-Wholesale space that investors may consider as our model shows that these too have the right combination of elements to post an earnings beat this quarter:

Bloomin' Brands, Inc. BLMN currently sports a Zacks Rank #1 and has an Earnings ESP of +29.41%.

McDonald's Corporation MCD carries a Zacks Rank #2 and has an Earnings ESP of +2.78%.

Papa John's International, Inc. PZZA carries a Zacks Rank #3 and has an Earnings ESP of +5.37%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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