Fast food chain Chipotle Mexican Grill Inc. (CMG) is expected to continue its dramatic operating and financial recovery by posting robust increases in earnings, revenue, and comparable store sales when it reports Q3 2019 earnings after the market close on Oct. 22. That would be a dramatic turnaround from 2018 when its stock fell two-thirds off of its highs due to a series of food poisoning scandals that hammered results.

That improved performance is reflected in the company's stock, which has soared by 91.5% this year through Tuesday's close. By comparison, the S&P 500 has gained 19.5%. Now, revenue is rebounding. For Q2, Chipotle reported revenue that was up by 13.2% year-over-year and EPS that was 94.1% greater. The Q2 revenue figure beat the consensus estimate by 2.0%, while EPS, adjusted for extraordinary items, beat the estimate by 6.1%. Chipotle's report was released after the close on July 23, and the stock closed up by 5.2% on the following day.

Chipotle
Source: TradingView.

Chipotle's YOY quarterly growth rate in revenues has been on an uptrend since Q4 2017. Basic EPS from continuing operations has been more volatile, up by 94.1% YOY in Q2, up by 49.3% in Q1, down by 26.3% in Q4 2018, and up by 98.6% in Q3 2018.

Investors focus on Chipotle's comparable store sales because it's a common metric used in analyzing revenue trends at brick-and-mortar retailers. It compares the sales generated by established store locations, usually defined as those in operation for at least 12 months, in the current reporting period to the sales generated in a prior period. The comparable store sales metric thus reveals whether revenues at existing locations are growing, shrinking, or stagnating in the aggregate. When retailers are adding new locations aggressively, the resulting rapid growth in a company's overall store sales may mask poor performance at existing locations. If so, the investors often watch to see if a retail chain is reaching market saturation, and if new locations may be cannibalizing sales at older ones.

Chipotle Earnings For 3Q 2019
  Q3 2017 Actual Q3 2018 Actual Q3 2019 Estimate
Earnings Per Share $0.69 $1.37 $3.19
Revenue $1.128 billion $1.225 billion $1.375 billion
Comparable Store Sales Growth YOY +1.0% +4.4% about +7.5%
Source: YCharts

For the 3 months ending June, Chipotle reported a comparable restaurant sales increase of 10% versus the same period in 2018, resulting from 6.5% more transactions and 3.5% more revenue per check, per the company's 10-Q report. For the 6 months ending on the same date, comparable restaurant sales also grew by 10% YOY. Chipotle notes that menu price increases were implemented in 2018. For the second half of 2019, Chipotle management has offered guidance anticipating a figure in the mid-to-high single digits, which would be about 7.5%.