Chipotle Mexican Grill, Inc. (CMG) Has Little Room for Error This Quarter

I’m sure many of you remember the media hailstorm Chipotle Mexican Grill, Inc. (NYSE:CMG) was undergoing the last time it reported first-quarter numbers: Chipotle was in the midst of a food scandal in which several customers had medical issues, and CMG stock was getting decimated.

Things have turned around drastically since then, and Wall Street is expecting a blowout quarter when Q1 2017 numbers are released Tuesday afternoon.

Current consensus is for Chipotle earnings of $1.26 a share, up from a loss of 88 cents per share last year, on 26% revenue growth to $1.1 billion. On top of that, same-store sales should increase 15%. Those numbers may seem robust, but keep in mind that the comparisons are very attractive because of last year’s difficulties.

Chipotle management has shifted gears since the food scandal broke, and they’re now looking to bring back the customer base they lost to add to the loyal customers that never gave up on the burrito shop. CMG stock is up more than 25% so far this year and trading near 52-week highs, and Tuesday’s numbers should go a long way toward providing insight on how well the company’s turnaround efforts are going.

Chipotle stock was oversold a year ago as earnings bottomed out, but after the impressive year-to-date rally, I believe it’s back to being fairly valued. Therefore, the risk is to the downside in the event that the company does not easily beat the expectations.

CMG stock chart

For CMG to keep hitting new yearly highs, both the top- and bottom-line numbers need to come in ahead of the consensus. At the same time, forward guidance must be impressive, too.

If you’re interested in food (and who isn’t it?), I like another company that is not your typical restaurant stock and is in great shape to take advantage of next-generation technology and trends. You can get all of the details in my report at my MoneyWire website.

Matthew McCall is the founder and president of Penn Financial Group, an investment advisory firm, as well as the editor of FUTR Stocks and the ETF Bulletin. Matt is currently in the midst of an exciting launch centered around his trademark three-prong investing approach that targets the mega-trends old Wall Street is missing out on. His next-gen investing strategy is delivering enormous profits in stocks and ETFs. Click here for more information on his latest venture.

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