Can Chipotle Earnings Surprise?

S&P 500 (NYSE:SPY) component Chipotle Mexican Grill, Inc. (NYSE:CMG) will unveil its latest earnings on Thursday, October 18, 2012. Chipotle Mexican Grill develops and operates fast-casual, fresh Mexican food restaurants in 35 states throughout the United States, the District of Columbia, and Ontario, Canada.

Chipotle Mexican Grill, Inc. Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average analyst estimate is for net income of $2.31 per share, a rise of 21.6% from the company’s actual earnings for the year-ago quarter. During the past three months, the average estimate has moved down from $2.37. Between one and three months ago, the average estimate moved down. It has risen from $2.30 during the last month. Analysts are projecting profit to rise by 33.3% versus last year to $9.01.

Past Earnings Performance: The company is looking to top estimates for the third straight quarter. Last quarter, it reported profit of $2.56 per share against a mean estimate of net income of $2.29, and the quarter before, the company exceeded forecasts by 4 cents with profit of $1.97 versus a mean estimate of net income of $1.93.

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A Look Back: In the second quarter, profit rose 61.2% to $81.7 million ($2.56 a share) from $50.7 million ($1.59 a share) the year earlier, exceeding analyst expectations. Revenue rose 20.9% to $690.9 million from $571.6 million.

Stock Price Performance: Between July 19, 2012 and October 12, 2012, the stock price fell $113.39 (-28.1%), from $403.86 to $290.47. The stock price saw one of its best stretches over the last year between November 23, 2011 and December 5, 2011, when shares rose for eight straight days, increasing 11.9% (+$35.76) over that span. It saw one of its worst periods between September 27, 2012 and October 5, 2012 when shares fell for seven straight days, dropping 12.3% (-$39.38) over that span.

Wall St. Revenue Expectations: On average, analysts predict $703.1 million in revenue this quarter, a rise of 18.8% from the year-ago quarter. Analysts are forecasting total revenue of $2.73 billion for the year, a rise of 20.3% from last year’s revenue of $2.27 billion.

Key Stats:

With double-digit revenue growth the past four quarters, this earnings release is a chance to keep that positive trend going. The company has averaged year-over-year revenue growth of 23.6% over the last four quarters.

After experiencing income increases the last three quarters, the company is hoping to keep the good news coming with this earnings announcement. Net income rose 23.7% in the fourth quarter of the last fiscal year and 35.1% in the first quarter before increasing again in the second quarter.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 4.13 last quarter. Having a ratio above 2:1 is usually considered a good indicator of a company’s liquidity and ability to meet creditor demands. The company regressed in this liquidity measure from 4.43 in the first quarter to the last quarter driven in part by an increase in liabilities. Current liabilities increased 20.5% to $150.1 million while assets rose 12.5% to $620.4 million.

Analyst Ratings: There are mostly holds on the stock with 15 of 22 analysts surveyed giving that rating.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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