Top restaurant chains, including Chipotle (NYSE:CMG) and McDonald’s (NYSE:MCD), are set to announce their second-quarter earnings. Ahead of Q2 earnings, the Top Wall Street analysts maintain a bullish outlook on these stocks.
But before we delve deeper into Q2 expectations, investors should note that TipRanks identifies the Top Wall Street analysts per sector, per timeframe, and against different benchmarks. The ranking shows an analyst’s ability to deliver higher returns through recommendations.
Coming back to CMG and MCD, Stifel Nicolaus analyst Chris O`Cull highlighted in his July 20 report that the mobile location data and franchisee checks indicate that Chipotle and McDonald’s will report stronger-than-expected domestic comparable sales. The analyst added that the magnitude of the beat would drive these stocks after Q2 earnings.
While the analysts’ data ahead of Q2 earnings reflects that these restaurant chains could deliver solid revenues, let’s dig deeper to understand what the Street forecasts for these companies.
What is the Future of CMG Stock?
Chipotle will roll out its second-quarter financial results after the market closes today. Wall Street expects CMG to deliver sales of $2.53 billion, reflecting a year-over-year and sequential improvement. The company delivered revenues of $2.2 billion in the prior-year quarter and $2.4 billion in Q1 of 2023.
During the Q1 conference call, CMG’s CEO Brian Niccol said that he expects Q2 comparable sales in the mid-to-high single-digit range. Higher comparable sales, menu innovations, and new restaurant openings will drive its top line.
Wall Street expects CMG to post earnings of $12.31 a share in Q2, up from $9.3 in the prior-year quarter, reflecting the benefit from menu price increases and lower dairy costs.
Ahead of Q2 earnings, Robert W. Baird analyst David Tarantino reiterated a Buy on CMG stock on July 20. The analyst sees Chipotle “well positioned to deliver strong operating momentum in 2H23 and potentially accelerated unit growth in 2024.”
Overall, CMG stock has received 19 Buy and four Hold recommendations from the Top Wall Street analysts. Their price target of$2,256.14 implies 7.83% upside potential.
While analysts are bullish, the option traders are pricing in a 6.4% move on earnings, which is lower than the previous quarter’s earnings-related move of 12.91% but higher than the average 4.67% move in the last eight quarters.
Is McDonald’s a Buy, Sell or Hold?
McDonald’s will announce its Q2 financials on July 27. Wall Street analysts expect the company to report revenues of $6.3 billion, up from $5.72 billion in the prior-year quarter. Its top line is likely to improve on a quarter-over-quarter basis.
On July 21, BTIG analyst Peter Saleh reiterated a Buy recommendation on MCD stock. The analyst raised the price target on McDonald’s stock to $315 from $305 as his franchisee checks indicated sales momentum continued in Q2.
The analyst remains upbeat about MCD’s digital sales and expects it to gain market share due to “lackluster competitors” and healthy traffic trends.
As sales are projected to increase, Wall Street analysts expect MCD to post higher earnings of $2.78 a share compared to $2.55 in the prior-year quarter.
Ahead of Q2 earnings, McDonald’s stock has received 19 Buy and four Hold recommendations from the Top Wall Street analysts. Their price target of $323.22 implies 10.56% upside potential.
Further, the option traders are pricing in a 2.72% move on earnings, which is higher than the previous quarter’s earnings-related move of -0.58% and well above the average 0.92% move in the last eight quarters.
