Chipotle stock slides 39% as Q2 earnings loom with margin concerns

Chipotle Mexican Grill reports second-quarter earnings July 29, with Wall Street forecasting EPS of $0.32 on revenue of $3.32 billion.

"The margin compression story is the dominant narrative heading into this print," a Citi analyst said, maintaining a Buy rating while cutting the price target to $45 from $46.

Consensus calls for earnings per share of $0.32, a 3% decline from $0.33 a year earlier. Revenue is expected to rise 8.4% to $3.32 billion, a sequential improvement from 7.4% growth in Q1 but well below the 18.2% pace in Q2 2024. Comparable restaurant sales are expected to grow about 1%, supported by menu pricing of roughly 1.5% and the return of Chipotle Honey Chicken.

The stock has fallen 39% from its 52-week high of $54.20, closing at $32.89 on July 20. The decline reflects persistent margin pressure: operating margin contracted to 12.9% in Q1 from 16.7% a year earlier, squeezed by mid-single-digit inflation in avocado, dairy and beef costs and low-single-digit wage inflation. Restaurant-level margin is expected to decline 240 basis points year over year to 25% in Q2.

Chipotle's price-to-earnings ratio has fallen to 29, matching the S&P 500's average multiple. Between 2018 and 2025, the stock rarely traded below 50x earnings. Of 35 analysts tracking CMG, 24 rate it a Strong Buy and nine recommend holding, with a consensus price target of $42.82 — implying 30% upside from current levels. Mizuho maintains an Outperform rating with a $41 target, while Morgan Stanley holds an Equal Weight stance at $37.

The company opened its first location in Mexico during the quarter, marking a milestone in international expansion. The refreshed Chipotle Rewards program, relaunched in April, has driven a nearly 25% increase in daily enrollments.

The earnings report will test whether Chipotle can stabilize customer visit frequency and restaurant-level margins while maintaining its pace of new store openings. Investors will watch the July 29 call for updated guidance on input costs and same-store sales trends for the second half of 2026.

This article is for informational purposes only and does not constitute investment advice.