What to look out for ahead of Chipotle’s Q2 results

As Chipotle’s stock edges past all-time highs, whether it can satisfy investors’ lofty expectations will be a key focus when the company reports its second quarter results on 23 July.

Chipotle Mexican Grill Inc is expected to report its second quarter (Q2) results on 23 July, after the market close.

Analysts remain cautious

Impressive Q1 figures which saw Chipotle deliver double-digit revenue growth and a 100.7% increase in digital sales have seen lofty growth expectations attached to the company. Year-to-date, Chipotle’s stock price has risen 71%.

Nevertheless, according to the Wall Street Journal, analysts remain mixed on the company’s outlook, with a consensus hold rating on the stock.

Chipotle goes digital

A stand out for Chipotle in recent times has been the company’s strategic focus on digitising the restaurant experience. With revenue from digital sales more than doubling during Q1 – and accounting for 15.7% of sales – investors will be looking to see if the company can maintain such incredible momentum in Q2 and beyond.

Besides the company’s new-found digital focus, Chipotle is projecting the total number of new restaurant openings to be between 140 to 155 for the current financial year.

Given that the company has only opened 15 new restaurants so far in 2019’s financial year, investors will likely be keen to see an uptick in this metric during the upcoming Q2 release.

Management’s turnaround

Following up on comparable restaurant sales growth of 9.9% during Q1, the company is now expecting ‘mid to high single digit comparable restaurant sales growth, up from the prior mid-single digit growth expectation’ for the 2019 financial year.

As Chipotle’s chief executive officer (CEO), Brian Niccol pointed out:

‘The ongoing improvement in each of our key operating metrics over the past few quarters gives us confidence that our mission to win today and cultivate the future, is resonating.’

High valuation, high expectations

These ongoing improvements have led investors to bid Chipotle’s stock to record highs in recent times. Currently, Chipotle Mexican Grill Inc trades at a heady price-to-earnings (P/E) ratio of 124, compared to the more modest 22.4 P/E ratio of the S&P 500.

Ultimately, while Chipotle’s digital initiative has reignited the company’s growth story – with such a steep P/E ratio, the potential for disappointment remains high if the company’s Q2 earnings fail to meet investors’ elevated expectations.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.