Here's Why Chipotle Mexican Grill (CMG) Fell More Than Broader Market

In the latest close session, Chipotle Mexican Grill (CMG) was down 3.81% at $32.56. The stock fell short of the S&P 500, which registered a loss of 1.52% for the day. Elsewhere, the Dow saw a downswing of 1.56%, while the tech-heavy Nasdaq depreciated by 1.78%.

Heading into today, shares of the Mexican food chain had lost 9.05% over the past month, lagging the Retail-Wholesale sector's loss of 1.95% and the S&P 500's loss of 2.25%.

The investment community will be paying close attention to the earnings performance of Chipotle Mexican Grill in its upcoming release. The company's upcoming EPS is projected at $0.24, signifying a 17.24% drop compared to the same quarter of the previous year. Our most recent consensus estimate is calling for quarterly revenue of $3.07 billion, up 6.73% from the year-ago period.

For the full year, the Zacks Consensus Estimates project earnings of $1.14 per share and a revenue of $12.92 billion, demonstrating changes of -2.56% and +8.37%, respectively, from the preceding year.

Investors should also take note of any recent adjustments to analyst estimates for Chipotle Mexican Grill. These revisions typically reflect the latest short-term business trends, which can change frequently. Hence, positive alterations in estimates signify analyst optimism regarding the business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.48% lower. Chipotle Mexican Grill currently has a Zacks Rank of #4 (Sell).

In the context of valuation, Chipotle Mexican Grill is at present trading with a Forward P/E ratio of 29.73. Its industry sports an average Forward P/E of 20.16, so one might conclude that Chipotle Mexican Grill is trading at a premium comparatively.

We can additionally observe that CMG currently boasts a PEG ratio of 2.08. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Retail - Restaurants industry currently had an average PEG ratio of 1.91 as of yesterday's close.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 170, which puts it in the bottom 31% of all 250+ industries.

The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow CMG in the coming trading sessions, be sure to utilize Zacks.com.

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Chipotle Mexican Grill, Inc. (CMG): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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