Benzinga | Sep 28, 2021 12:16PM EDT

Looking Into Chipotle Mexican Grill's Return On Invested Capital

According to Benzinga Pro, during Q2, Chipotle Mexican Grill (NYSE:CMG) earned $245.53 million, a 46.92% increase from the preceding quarter. Chipotle Mexican Grill also posted a total of $1.89 billion in sales, a 8.67% increase since Q1. In Q1, Chipotle Mexican Grill earned $167.11 million, and total sales reached $1.74 billion.

Why Is ROIC Significant?

Return on Invested Capital is a measure of yearly pre-tax profit relative to capital invested by a business. Changes in earnings and sales indicate shifts in a company's ROIC. A higher ROIC is generally representative of successful growth of a company and is a sign of higher earnings per share in the future. A low or negative ROIC suggests the opposite. In Q2, Chipotle Mexican Grill posted an ROIC of 11.49%.

Keep in mind, while ROIC is a good measure of a company's recent performance, it is not a highly reliable predictor of a company's earnings or sales in the near future.

Return on Invested Capital is a measure of yearly pre-tax profit relative to capital invested by a business. Changes in earnings and sales indicate shifts in a company's ROIC. A higher ROIC is generally representative of successful growth of a company and is a sign of higher earnings per share in the future. A low or negative ROIC suggests the opposite. In Q2, Chipotle Mexican Grill posted an ROIC of 11.49%.

Keep in mind, while ROIC is a good measure of a company's recent performance, it is not a highly reliable predictor of a company's earnings or sales in the near future.

For Chipotle Mexican Grill, the positive return on invested capital ratio of 11.49% suggests that management is allocating their capital effectively. Effective capital allocation is a positive indicator that a company will achieve more durable success and favorable long-term returns.

Upcoming Earnings Estimate

Chipotle Mexican Grill reported Q2 earnings per share at $7.46/share, which beat analyst predictions of $6.49/share.