Yahoo Finance Does Chipotle Mexican Grill Inc’s (NYSE:CMG) Recent Track Record Look Strong?
For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at Chipotle Mexican Grill Inc’s (NYSE:CMG) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. See our latest analysis for Chipotle Mexican Grill
How CMG fared against its long-term earnings performance and its industry
For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This enables me to assess different stocks in a uniform manner using new information. For Chipotle Mexican Grill, its most recent bottom-line (trailing twelve month) is US$189.58M, which, in comparison to last year’s level, has increased by a substantial 98.53%. Given that these figures may be somewhat short-term thinking, I have estimated an annualized five-year value for CMG’s net income, which stands at US$278.90M This means that, though earnings increased from last year’s level, over time, Chipotle Mexican Grill’s earnings have been diminishing on average.
Why is this? Well, let’s look at what’s transpiring with margins and if the entire industry is facing the same headwind. Revenue growth over the past few years, has been positive, nevertheless earnings growth has been declining. This implies that Chipotle Mexican Grill has been ramping up expenses, which is hurting margins and earnings, and is not a sustainable practice. Viewing growth from a sector-level, the US hospitality industry has been growing its average earnings by double-digit 15.65% over the past twelve months, and 12.13% over the past half a decade. This means whatever tailwind the industry is gaining from, Chipotle Mexican Grill is capable of amplifying this to its advantage.
What does this mean?
Chipotle Mexican Grill’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. There could be variables that are impacting the industry as a whole, hence the high industry growth rate over the same time period. I suggest you continue to research Chipotle Mexican Grill to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for CMG’s future growth? Take a look at our free research report of analyst consensus for CMG’s outlook.
Financial Health: Is CMG’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2018. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
