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TheStreet Open House

Jim Cramer Breaks Down Google, IBM, Goldman Sachs and Chipotle's Confusing Earnings

NEW YORK (TheStreet) -- TheStreet's Jim Cramer discusses the "confusing" earnings of Chipotle  (CMG)Google  (GOOG), IBM (IBM) and Goldman Sachs  (GS).

Firstly, he says Chipotle reported "just OK" earnings, but this is a "revenue story," as the company reported comparable-store sales growth of 13%. Cramer was looking for 9% growth, calls 13% "extraordinary" and says investors should buy Chipotle on any weakness.

IBM missed on earnings and revenue but Cramer would still buy it because "it is a second-half story."

Cramer also does not want to back away from Google at all because it sells at 18 times earnings with a 19% growth rate. He reasons portfolio managers will always ultimately gravitate to companies that offer that kind of growth rate for that kind of multiple. He points out it does not happen immediately, though, and people must go through models.

Cramer believes both IBM and Google will both be trading higher in two weeks.

Finally, Cramer calls Goldman Sachs "impenetrable" but says the key takeaway is that it trades at slightly more than one times book value. This means if the company closed and gave cash back to investors, then the investors would more or less break even.

Must Watch: Jim Cramer on Chipotle, IBM, Google, and Goldman Sachs Earnings

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

---------- Separately, TheStreet Ratings team rates CHIPOTLE MEXICAN GRILL INC as a "buy" with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate CHIPOTLE MEXICAN GRILL INC (CMG) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 3.8%. Since the same quarter one year prior, revenues rose by 20.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 29.74% and other important driving factors, this stock has surged by 55.43% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • CHIPOTLE MEXICAN GRILL INC has improved earnings per share by 29.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CHIPOTLE MEXICAN GRILL INC increased its bottom line by earning $10.46 versus $8.75 in the prior year. This year, the market expects an improvement in earnings ($13.00 versus $10.46).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Hotels, Restaurants & Leisure industry average, but is less than that of the S&P 500. The net income increased by 29.8% when compared to the same quarter one year prior, rising from $61.35 million to $79.62 million.
  • Net operating cash flow has increased to $140.07 million or 11.13% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -31.17%.
  • You can view the full analysis from the report here: CMG Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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