Market Overview

ROCE Insights For Chipotle Mexican Grill

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In Q2, Chipotle Mexican Grill (NYSE: CMG) saw a decline in both earnings and sales. Earnings decreased by 89.41% to $76.39 million, and sales dropped by 3.26% to $1.36 billion. Chipotle Mexican Grill reached earnings of $721.63 million and sales of $1.41 billion in Q1.

What Is Return On Capital Employed?

Changes in earnings and sales indicate shifts in Chipotle Mexican Grill’s Return on Capital Employed, a measure of yearly pre-tax profit relative to capital employed in a business. Generally, a higher ROCE suggests successful growth in a company and is a sign of higher earnings per share for shareholders in the future.

In Q2, Chipotle Mexican Grill posted an ROCE of 1.13%.

It is important to keep in mind ROCE evaluates past performance and is not used as a predictive tool. It is a good measure of a company's recent performance, but several factors could affect earnings and sales in the near future.

ROCE is an important metric for the comparison of similar companies. A relatively high ROCE shows Chipotle Mexican Grill is potentially operating at a higher level of efficiency than other companies in its industry. If the company is generating high profits with its current level of capital, some of that money can be reinvested in more capital which will lead to higher returns and earnings per share growth.

In Chipotle Mexican Grill's case, the positive ROCE ratio will be something investors pay attention to before making long-term financial decisions.

Q2 Earnings

Chipotle reported Q2 earnings per share at $0.4/share against analyst predictions of $0.19/share.

 

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Posted-In: Earnings News Restaurants General

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