Chipotle (CMG) Stock Up Ahead of Earnings, RBC Cuts Estimates
NEW YORK (TheStreet) -- Chipotle Mexican Grill (CMG) - Get Report will report 2016 second quarter earnings after tomorrow's market close.
Analysts are looking for earnings of 93 cents per share on $1.053 billion in revenues, compared to earnings of $4.45 per share on $1.197 billion in revenues for the same quarter in 2015.
Additionally, the company's fiscal 2016 earnings estimates were lowered to $5.02 from $5.52 and to $12.20 from $12.92 for 2017 at RBC Capital Markets this morning.
The firm has an "outperform" rating and $485 price target on shares of the Denver-based Mexican-style food chain.
The estimates decrease is a result of "lower restaurant margin assumptions," according to the analyst note.
Chipotle's margins may recover in 2017, but RBC's said for 2016 "Chipotle's ongoing sales declines, food safety investments, and traffic initiatives will result in trough earnings."
A recent RBC study of consumer purchase intent revealed that Chipotle under-performed its fast casual peers in both quality and healthiness.
But the firm believes a slow sales recovery is starting for the chain and said it "will be tracking scores quarterly to see if recently introduced loyalty program and food news can restore frequency among former loyal consumers."
Shares of Chipotle are up 0.04% to $415.48 in early-morning trading.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate CHIPOTLE MEXICAN GRILL INC as a Hold with a ratings score of C. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strongest point has been its very decent return on equity which we feel should persist. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and poor profit margins.
You can view the full analysis from the report here: CMG
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