What To Watch Ahead Of Chipotle's Earnings

Chipotle Mexican Grill, Inc. (NYSE: CMG) is expected to report a loss and 19 percent decline in sales when it reports its first-quarter results after the market closes Tuesday. Since investors may have already factored this, they may now focus on whether the burrito chain is successful in bringing back customers via free food initiatives and other promotional activities.

The operator of the fast-casual restaurants ramped up its marketing efforts this quarter to win back customer trust after a series of food-illness outbreaks, including E. coli and norovirus, hampered the reputation of the company and its stock price.

As part of promotional activities, Chipotle started to offer free burritos, free chips and mailer coupons. But, whether these efforts have actually paid off and boosted sales (read comps), is what investors will be watching in the results and subsequent company comments.

Related Link: Be Careful With Chipotle Stock Before (And After) Earnings

In addition, another key thing to watch is whether investors still have the appetite for the shares at all, as shares trade down 41.5 percent below its 52-week high of $758.61.

Wall Street analysts, on average, expect the company to report a loss of $0.95 a share versus a profit of $3.88 a share in the same quarter last year. Consensus expectation calls for revenue of $880.21 million, down from $1.09 billion a year ago.

In the past 90 days, the profit estimate had fallen from $2.14 a share to a loss of $0.95 a share. Meanwhile, Chipotle has able to beat consensus earnings expectations in three out of the past four quarters.

The market will also look for CMG's comments about the June quarter as analysts are expecting fewer sales declines. The Street expects second-quarter earnings of $1.59 a share on revenue of $1.11 billion. This implies a year-over-year drop of 64 percent in profit and 7.4 percent in sales.

Chipotle was trending slightly up by .28 percent following Tuesday's opening bell, trading around the $445 handle.