Chipotle Reported a Loss for the First Time in Its History
E. Coli Aftermath: Chipotle’s 2016 Outlook Looks Bleak
1Q16 performance
Chipotle Mexican Grill (CMG) is based in Denver, Colorado. It’s a fast-casual restaurant chain. Chipotle reported its 1Q16 results on April 26, 2016, after the Market closed. The company’s revenues were at $834.5 million—a decline of 23.4% from 1Q15. Its EPS (earnings per share) declined by 122.2% to $0.88.
Market response
Chipotle’s 1Q16 EPS was better than analysts’ expectation of -$0.97. However, its revenue failed to meet analysts’ expectation of $868.8 million. The decline in revenue and concerns over declining same-store sales growth decreased shareholders’ confidence. This led to a decline in the share price. Chipotle ended April 27 down by 6.5%.
Since the E. coli outbreak in October 2015, Chipotle’s share price has been falling. Year-to-date, Chipotle’s share price is down by 13.1%. During the same period, the share prices of Chipotle’s peers Panera Bread (PNRA), Shake Shack (SHAK), and Brinker International (EAT) have returned 9.5%, -5.3%, and -4.3%, respectively. Also, the share price of the Guggenheim S&P 500 Pure Growth ETF (RPG) fell by 0.5% since the beginning of 2016.
Series overview
In this series, we’ll discuss the 1Q16 earnings call and notes along with Chipotle’s performance on key metrics during the quarter. We’ll also cover management’s guidance and analysts’ estimates for the rest of 2016 and beyond.
Let’s start by discussing Chipotle’s revenue in 1Q16.
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