Chipotle Q4 Earnings Preview: Here's What Traders Are Pricing in for CMG Stock

Chipotle Mexican Grill (CMG) is trading relatively flat this afternoon, recovering from early losses after U.S. President Trump and Mexican President Sheinbaum agreed to a one-month delay on threatened tariffs. CMG investors will no doubt be hoping for a longer-term resolution soon, as Chipotle relies on some imports from Mexico that could be subject to those tariffs.

Looking ahead, investors are anticipating even more volatility from the restaurant stock this week. CMG is set to report its fourth-quarter earnings after the close this Tuesday, Feb. 4, and options traders are pricing in a bigger-than-usual reaction to the event.

Specifically, the stock’s at-the-money straddle expiring this Friday is pricing in a move of 6.37%, compared to CMG’s average post-earnings reaction of 5.81% after the past four announcements. Following last February’s report, Chipotle stock soared 7.22% in a single day.

Shares gapped lower last August after CEO Brian Niccol left to take the top job at Starbucks (SBUX), but CMG’s price weakness started in Q2 of 2024 amid growing concerns about the chain’s portion sizes on social media - not to mention the stock’s rich valuation. 

CMG is now down 15.8% from the highs set last June, and the stock has recently run into resistance at its overhead 200-day moving average.  

With a forward price/earnings-to-growth (PEG) ratio of 2.43, CMG is still valued at a premium to its industry peers on this basis. In fact, Chipotle’s current PEG ratio also suggests that investors are paying up for bigger expected earnings growth than the likes of Nvidia (NVDA), with a PEG ratio of 1.07, and Meta Platforms (META), at 1.53.