Market Overview

Chipotle Naming A New CEO Would Remove A Big Overhang, Says William Blair

Chipotle Naming A New CEO Would Remove A Big Overhang, Says William Blair

Chipotle Mexican Grill, Inc. (NYSE: CMG) is scheduled to report its fourth quarter results Feb. 6, and investors are expecting an update to the company's search for a new CEO to replace Steve Ells.

The Analyst

William Blair's Sharon Zackfia maintains a Market Perform rating on Chipotle Mexican Grill's stock.

The Thesis

Chipotle's earnings per share is likely to fall short of the $1.38 per share the consensus estimates is calling for, Zackfia said in a note. The company is projected to earn $1.05 per share in the quarter and report a low-single-digit comp decline (and a mid-single-digit traffic decline), which also falls short of the consensus estimate calling for a 1.5 percent gain.

Zackfia said Chipotle's below consensus quarter could be attributed to more difficult comparisons as the quarter progressed, a moderation of queso sales after the initial trial period in September and October, and reports in December of an illness associated with a California-based store.

The restaurant chain is likely to reiterate its 2018 guidance of opening 130 to 150 new stores, which implies a 5 to 6 percent unit growth. This would mark a decrease from the 7 to 8 percent growth seen in 2017 as management is focusing on various operational changes to improve training, integration, new restaurant openings, and other factors.

In terms of financial guidance, the ongoing search for a new CEO makes it unclear how much additional guidance will be provided, Zackfia said. The appointment of a new CEO will ultimately prove to be a "positive catalyst" and accelerate the company's turnaround. But until this is confirmed, investors could expect to see "significant near-term uncertainty."

Price Action

Shares of Chipotle were trading lower by nearly 4 percent Monday at $331.46.

Related Links:

Steve Ells Returns To Sole Chipotle CEO Role; What Should We Expect?

An Early Wall Street Reaction To Chipotle's CEO Announcement

Image credit: Chis Potter, Flickr

Latest Ratings for CMG

Sep 2019UpgradesNeutralOutperform
Aug 2019MaintainsOverweight
Aug 2019MaintainsBuy

View More Analyst Ratings for CMG
View the Latest Analyst Ratings

Posted-In: Queso Restaurant Earnings Sharon ZackfiaAnalyst Color Restaurants Management Analyst Ratings General Best of Benzinga


Related Articles (CMG)

View Comments and Join the Discussion!

Latest Ratings

NWNRBC CapitalMaintains69.0
CSBRRoth CapitalInitiates Coverage On9.3
BIOSSunTrust Robinson HumphreyMaintains4.3
TWNKSunTrust Robinson HumphreyMaintains16.0
EXPOSunTrust Robinson HumphreyMaintains81.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

Dunkin Brands Gets An Upgrade Ahead Of Q4 Earnings

Recent Fraud News May Not Have Material Impact on Aflac; Raymond James Upgrades