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-   -   Bank Of America Downgrades Chipotle For Paying Workers Too Much (http://www.politicalwrinkles.com/economics/53411-bank-america-downgrades-chipotle-paying-workers-too-much.html)

saltwn 11-07-2017 11:45 PM

Bank Of America Downgrades Chipotle For Paying Workers Too Much
 

break up the banks and regulate the hell out of them

GottaGo 11-08-2017 07:26 AM

Re: Bank Of America Downgrades Chipotle For Paying Workers Too Much
 
Perhaps I'm missing something, mainly because I can't see videos when I'm logged in under IE, but what the hell does BoA have to do with 'downgrading' another company?

The are a Credit Card processor and financial institution. Downgrading is usually in regards to stocks or bonds, and handled by such groups as Standard and Poor.

The only possibility I see is if BoA carries Chipolte's debt, and their financials for a particular period did not meet the Loan Covenants. However, the information is usually confidential between the bank and the borrower.

saltwn 11-08-2017 09:49 AM

Re: Bank Of America Downgrades Chipotle For Paying Workers Too Much
 
Quote:

Originally Posted by GottaGo (Post 916465)
Perhaps I'm missing something, mainly because I can't see videos when I'm logged in under IE, but what the hell does BoA have to do with 'downgrading' another company?

The are a Credit Card processor and financial institution. Downgrading is usually in regards to stocks or bonds, and handled by such groups as Standard and Poor.

The only possibility I see is if BoA carries Chipolte's debt, and their financials for a particular period did not meet the Loan Covenants. However, the information is usually confidential between the bank and the borrower.



Bank of America Merrill Lynch downgraded Chipotle and cut its earnings targets for 2018 and 2019, saying the struggling restaurant chain will have trouble cutting back labor costs any further than it already has.

"We are downgrading Chipotle to Underperform from Neutral as we believe, assuming no significant tax reform, that 2018 and 2019 consensus EPS needs to drop at least 10 percent," analyst Gregory Francfort write in a note Wednesday. "We believe further gains from trimming hours will prove difficult which limits the opportunity to get labor below 27 percent of sales even if traffic recovers."

The average weekly hours for full- and part-time Chipotle crew members were cut from a high of 34.6 in 2006 to 21.7 in 2016, according to the Bank of America report.

Chipotle spokesperson Chris Arnold told CNBC in an email that, on the contrary, it has increased hours.

"We absolutely have not cut hours. In fact, we have recently increased scheduled hours for our crew so that our teams would be ready to prepare and serve our new queso. The Bank of America analysis is making estimates and conclusions about our management practices over a 12-year time frame and the scale of our business and labor wages have changed dramatically over that time."

The Bank of America analyst slashed his 2017 earnings estimate to $7.40 from $7.60, and lowered his 2018 estimate to $9.50 from $10.50. Shares of Chipotle have risen nearly 10 percent over the past month, but remain down over 12 percent this year.

By late morning, shares were down 2 percent following the call.


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