Why Is Chipotle (CMG) Down 8.1% Since Last Earnings Report?

A month has gone by since the last earnings report for Chipotle Mexican Grill (CMG). Shares have lost about 8.1% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Chipotle due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Chipotle Q4 Earnings & Revenues Surpass Estimates

Chipotle reported fourth-quarter 2025 results, with earnings and revenues beating the Zacks Consensus Estimate. The top line increased from the prior-year quarter’s figure, while the bottom line remained flat.

CMG’s Q4 Earnings & Revenue Discussion

For the quarter under review, CMG reported adjusted earnings per share (EPS) of 25 cents, beating the Zacks Consensus Estimate of 24 cents. The bottom line was flat on a year-over-year basis.

Quarterly revenues of $2.98 billion topped the consensus mark of $2.96 billion by 0.6%. The top line rose 4.9% on a year-over-year basis. This upside was driven by new restaurant openings and higher gift card breakage revenues of $27.0 million, up $19.1 million from the prior-year quarter.

Comparable restaurant sales in the fourth quarter fell 2.5% against 5.4% growth reported in the prior-year quarter. During the quarter, comps were hurt by lower transactions of 3.2%. However, this was partially mitigated by a 0.7% rise in average checks.

During the fourth quarter, digital sales contributed 37.2% to total food and beverage revenues.

Chipotle’s Restaurant Openings

Strength in new restaurant openings aided the company’s performance in the fourth quarter. In the reported quarter, Chipotle opened 132 company-owned restaurants, with 97 featuring a Chipotlane. The company reported strong performance of Chipotlanes, contributing to higher sales, better margins and stronger returns at new locations.

CMG’s Costs, Operating Highlights & Net Income

In the fourth quarter of 2025, food, beverage and packaging costs, as a percentage of revenues, came in at 30.2%, compared with 30.4% reported in the prior-year quarter. The improvement was driven by menu price increases, lower dairy costs and enhanced cost-of-sales efficiencies. This was partly offset by ongoing inflationary pressures, particularly in beef and chicken, as well as the impact of tariffs implemented in 2025. We expected the metric to be 30%.

In the quarter under discussion, the restaurant-level operating margin reached 23.4%, down from 24.8% reported in the prior-year period. We predicted the metric to be 24.1%.

Adjusted net income in the reported quarter amounted to $331.3 million, compared with $340 million reported in the prior-year quarter. Our estimate for the metric was $352.5 million.

Balance Sheet of Chipotle

As of Dec. 31, 2025, the company reported cash and cash equivalents of $350.5 million compared with $748.5 million as of Dec. 31, 2024.

As of Dec. 31, 2025, inventory totaled $49.5 million compared with $48.9 million as of Dec. 31, 2024.

CMG’s 2025 Highlights

Total revenues in 2025 amounted to $11.9 billion compared with $11.3 billion in 2024.

Adjusted net income in 2025 came in at $1.57 billion compared with $1.54 billion reported in 2024.

In 2025, adjusted diluted EPS came in at $1.17 compared with $1.12 reported in the previous year.

CMG’s 2026 Outlook

For 2026, management anticipates comparable sales to remain roughly flat. It expects to open between 350 and 370 new company-operated restaurants in 2026, with more than 80% featuring a Chipotlane. It expects a tax rate in the range of 24-26% in 2026.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -12.52% due to these changes.

VGM Scores

Currently, Chipotle has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock has a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Chipotle has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Chipotle belongs to the Zacks Retail - Restaurants industry. Another stock from the same industry, Starbucks (SBUX), has gained 0.2% over the past month. More than a month has passed since the company reported results for the quarter ended December 2025.

Starbucks reported revenues of $9.92 billion in the last reported quarter, representing a year-over-year change of +5.5%. EPS of $0.56 for the same period compares with $0.69 a year ago.

For the current quarter, Starbucks is expected to post earnings of $0.42 per share, indicating a change of +2.4% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.4% over the last 30 days.

Starbucks has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.

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This article originally published on Zacks Investment Research (zacks.com).

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