Chipotle Shares Plummet on Guidance
Chipotle Mexican Grill (NYSE: CMG) released preliminary fourth quarter results on Wednesday -- they weren't pretty, at least by analysts' standards.
While analysts hoped for an EPS around $2.09, the company said it expects to reporte around $1.92-1.97.
On a yearly basis, the results aren't bad. The company reports an expected increase of over 17 percent in revenue year-over-year. Comparable restaurant sales are expected to be up nearly 4 percent, as well. The restaurant chain opened 60 new restaurants during the quarter, indicating that business is holding up.
Yet, as mentioned, hope may have overtaken reality. Accordingly, the stock plunged well over 10 percent early on Wednesday; though shares have recovered to some extent.
Hovering between $279 and $280 per share, Chipotle is at its lowest point in a month. After reaching a low of just over $278 on December 17, it had been above $280 ever since and closed at over $297 on Tuesday.
Investors may recall David Einhorn's recommendation to short Chipotle. The short seller, who also recommended investors sell Green Mountain (NASDAQ: GMCR) and Lehman Brothers before its collapse, told an audience at the Value Investing Congress in October that shares were due for a correction.
Meanwhile, analysts are mixed. William Blair reaffirmed its “Outperform” rating today. However, Jeffries reiterated its “Underperform” rating and several other analysts are only “Neutral.”
Overall, analyst sentiment is largely in favor of a “Hold”, as 17 of 27 analysts offer this recommendation, according to Yahoo Finance.
Interested investors should look ahead to February 5, when the company will give its full earnings results.
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