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Chipotle Mexican Grill, Inc. (CMG) Earnings Look Primed to Stay Spicy-Hot

Chipotle Mexican Grill, Inc. (NYSE:CMG)Chipotle Mexican Grill, Inc. (NYSE:CMG) will release its quarterly report on Thursday, and shareholders have already gotten a head-start on celebrating, with shares starting to approach levels not seen since last summer. But will the burrito giant be able to keep investors happy this time around, or will its shares plunge again as they did a year ago?

For Chipotle Mexican Grill, Inc. (NYSE:CMG), it’s not a matter of whether earnings will grow but rather how much they’ll grow, as the chain has tapped into the trend toward healthier foods and limited-menu options that emphasize the company’s strengths. Let’s take an early look at what’s been happening with Chipotle Mexican Grill, Inc. (NYSE:CMG) over the past quarter and what we’re likely to see in its quarterly report.

Stats on Chipotle

Analyst EPS Estimate $2.81
Change From Year-Ago EPS 9.8%
Revenue Estimate $803.07 million
Change From Year-Ago Revenue 16.2%
Earnings Beats in Past 4 Quarters 2

Source: Yahoo! Finance.

Will Chipotle earnings get spicier this quarter?
Analysts have gotten even more optimistic in recent months about Chipotle’s earnings prospects, boosting their June-quarter estimates by a nickel per share and their full-year 2013 consensus by more than $0.35 per share. The stock has also responded favorably, having risen more than 12% since early April.

Much of those share-price gains came right after Chipotle reported earnings for the first quarter in April. Even though same-store sales only managed to rise 1% and operating margins declined by more than a full percentage point, the company posted strong earnings and overall revenue growth from new restaurant locations, and more importantly gave positive guidance on future store openings toward the higher end of its previously expected range.

Still, Chipotle Mexican Grill, Inc. (NYSE:CMG) has looked for ways to boost its growth even further. Plans to offer premium margaritas with Patron tequila could help drive further sales, although other food chains have had mixed results from premium beverages. McDonald’s Corporation (NYSE:MCD), for instance, has seen a rise in customer complaints as waits in line for beverages have gotten longer.

Chipotle has also decided to expand on its ShopHouse Asian Kitchen concept, announcing last month that it would open new stores in Washington, D.C., and Los Angeles. Chipotle hasn’t gone very fast with its expansion plans, but given the success of its test restaurant near Washington’s Dupont Circle, ShopHouse could give Chipotle a way to grow even in areas where it already has a large number of its own namesake restaurant locations.

Another potential way that Chipotle Mexican Grill, Inc. (NYSE:CMG) could probably boost sales would be to raise its menu prices. Food costs have risen substantially, and McDonald’s and Panera Bread Co (NASDAQ:PNRA) have both successfully pushed price hikes through to customers. At the same time, though, Chipotle doesn’t want to alienate customers at a time in which sales growth is already under pressure.

In Chipotle’s earnings report, watch to see how the company responds to news late last month that Jack in the Box Inc. (NASDAQ:JACK) would close 67 of its Qdoba restaurants, which compete against Chipotle Mexican Grill, Inc. (NYSE:CMG) in the Mexican food space. With its having demonstrated its superiority over its burrito rivals, Chipotle is still in a strong position to make the most of the industry’s potential well into the future.

The article Chipotle Earnings Look Primed to Stay Spicy-Hot originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends and owns shares of Chipotle Mexican Grill, McDonald’s, and Panera Bread.

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