CMG is expected to report Q4 earnings tonight after the close. There is a conference call scheduled for 16:30 PM.

CMG preannounced Q4 EPS of $0.50-0.58 vs $0.98 consensus on revs of $1.035 bln vs $1.05 bln consensus

  • Co also preannounced Q4 comps of -4.8% vs prior guidance of low single digit decrease
    • Comps by month: -20.2% in October, -1.4% in November, +14.7% in December
  • Investors were pleased that comps starting growing again after the company began lapping the sales decline that followed the health scares last year.
  • Preannounced Q4 operating margin of 13-14%, below forecasts driven by increased promotional spend and costs related to testing television advertising
  • The co also announced a $100 mln share repurchase, in addition to previously announced repurchase authorizations totaling $2.1 billion
  • Since the co pre-announced in January, investors will be more interested in any comments the co may make on how the current quarter/FY 17 is progressing as Q1 (2017) will be the first, full quarter/year lapping the easy compares caused by the E.Coli scandal. 
    • Current consensus estimates Q1 comps of +12.6%
  • Investors will also be listening for any comments the co may have on potential Trump regulations (specifically the border tax impacting produce costs). 
  • The co has traded in a 350/420 range throughout the quarter and it recently closed above its 200 day at 417.88 on January 24.
    • The co is currently trading around the top of the quarter's trading range (around 420) heading into earnings. 

Short interest as % of float as of January 13 is at ~20%