Chipotle Mexican Grill Inc. (NYSE:CMG) is set to report FQ1 2014 earnings before the market opens on Thursday, April 17th. Chipotle was a big winner in the last earnings season. The fast casual restaurant industry has been growing rapidly, and Chipotle's throughput improvements have boosted earnings significantly. Analysts expect more rapid growth in the fast casual restaurant industry, Chipotle's earnings are expected to climb by 24% per year in both 2014 and 2015. Here's what investors expect from Chipotle this quarter.
The information below is derived from data submitted to the Estimize.com platform by a set of Buy-Side and Independent analyst contributors.
The current Wall Street consensus expectation is for Chipotle to report $2.83 EPS and $871.40M revenue, while the current Estimize.com consensus from 32 Buy-Side and Independent contributing analysts is $2.84 EPS and $874.66M in revenue. This quarter, the buy side, as represented by the Estimize.com community, is expecting Chipotle to beat the Wall Street consensus on both the top and bottom line by a small margin.
Over the past 6 quarters, the consensus from Estimize.com has been more accurate than Wall Street in forecasting Chipotle's EPS and revenue 2 and 4 times respectively. By tapping into a wider range of contributors, including hedge-fund analysts, asset managers, independent research shops, students, and non-professional investors, Estimize has created a data set that is more accurate than Wall Street up to 69.5% of the time, but more importantly, it does a better job of representing the market's actual expectations. It has been confirmed by Deutsche Bank Quant. Research and an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.
The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case, we are seeing a small difference between the two groups' expectations.
The distribution of estimates published by analysts on the Estimize.com platform range from $2.69 to $2.97 EPS and from $847.54M to $895.20M in revenues. This quarter, we're seeing a moderate-to-large distribution of estimates than usual for Chipotle.
The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution of estimates signals less agreement in the market, which could mean more volatility post-earnings.
Over the past 4 months, the Wall Street EPS consensus rose from $2.75 to $2.83, while the Estimize consensus increased from $2.75 to $2.84. Meanwhile, the Wall Street revenue consensus surged from $844.92M to $871.40M, while the Estimize forecast shot up from $853.22M to $874.66M. Timeliness is correlated with accuracy, and rising analyst revisions at the end of the quarter are often a bullish indicator.
The analyst with the highest estimate confidence rating this quarter is turbinecity, who projects $2.83 EPS and $875.54M in revenue. turbinecity was our Winter 2014 season winner, and is ranked 6th overall among over 4,000 contributing analysts. Over the past 2 years, turbinecity has been more accurate than Wall Street in forecasting EPS and revenue 59% and 55% of the time respectively over 1643 estimates. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research, which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case, turbinecity is expecting Chipotle to report more revenue but lower EPS than the Estimize community is calling for.
Chipotle stock rose 12% last quarter on the back of a strong earnings report, reflecting faster customer turnover and increased profitability. This quarter, Wall Street is expecting Chipotle to report 15.5% EPS growth compared to FQ1 of last year, and 19.9% yoy revenue growth. The Estimize community predicts that Chipotle will beat those ambitious numbers by a small margin.