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Chipotle Mexican Grill (CMG) Gains But Lags Market: What You Should Know

Zacks Equity Research

In the latest trading session, Chipotle Mexican Grill (CMG) closed at $1,321.03, marking a +1.64% move from the previous day. The stock lagged the S&P 500's daily gain of 2.02%. Elsewhere, the Dow gained 1.6%, while the tech-heavy Nasdaq added 2.71%.

Coming into today, shares of the Mexican food chain had gained 13.3% in the past month. In that same time, the Retail-Wholesale sector gained 1.86%, while the S&P 500 lost 0.39%.

Investors will be hoping for strength from CMG as it approaches its next earnings release, which is expected to be October 21, 2020. On that day, CMG is projected to report earnings of $3.30 per share, which would represent a year-over-year decline of 13.61%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.58 billion, up 12.71% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $10.87 per share and revenue of $5.97 billion, which would represent changes of -22.63% and +6.84%, respectively, from the prior year.

Any recent changes to analyst estimates for CMG should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 0.44% higher. CMG is holding a Zacks Rank of #3 (Hold) right now.

Looking at its valuation, CMG is holding a Forward P/E ratio of 119.57. This represents a premium compared to its industry's average Forward P/E of 33.99.

Also, we should mention that CMG has a PEG ratio of 6.21. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Retail - Restaurants stocks are, on average, holding a PEG ratio of 3.79 based on yesterday's closing prices.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 120, which puts it in the top 48% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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