Adjusted earnings of 40 cents a share were about in line with expectations, while second-quarter revenue of $1.36 billion slipped just 4.9% year-over-year and eked past analysts’ estimates by $20 million.
The 9.8% decline in comparable-store sales came in ahead of estimates as well, with consensus expectations calling for an 11.9% decline.
The Newport Beach, Calif., burrito chain's sales decline was modest compared with some restaurants, as the coronavirus pandemic continues to cause issues for companies.
Further, Chipotle is operating with almost $1 billion in cash on its balance sheet and no debt. Digital sales spiked in the quarter as demand came flooding back. To me, a dip in Chipotle stock is an opportunity to buy, not to sell.
Trading Chipotle Stock
The stock's initial rebound was very sharp from the March lows. In May, Chipotle stock broke out over $900 resistance and used that momentum to eventually clear $1,000.
Earlier this month, share broke out over $1,075, a notable level of resistance amid the rebound. This level acted as support later in the month, working in tandem with the 20-day moving average to keep the trend alive. That was a bullish development for investors to keep their eyes on.
Now, this level may be called upon once again. That is, if the 20-day moving average and uptrend support (blue line) fail to buoy Chipotle stock near $1,100.
While it would require a bit more downside, I would love for a test of that previous $1,075 support level and the 50-day moving average just below that. That would mark a 10% to 11% decline from the highs, which were hit just this week.
Below the 50-day moving average, and it’s possible we get a larger dip. On the upside, look to see if Chipotle stock recovers the 138.2% extension and $1,150 mark.
Above puts the 52-week high in play at $1,187. A breakout could potentially launch the stock to the 161.8% extension, up at $1,264.91.