Shares of Chipotle Mexican Grill (CMG) were rising over 4% in Tuesday morning trading, after the Mexican-style restaurant chain reported that same-store-sales were beginning to normalize after a 2015 food-born illness sunk both sales and the stock.
Chipotle' stock took a hit on Monday, after the company reported earnings estimates below analysts' projections by nearly half. However, it has rebounded after indicating that same-store-sales have shown a pattern of improvement.
"I couldn't believe that people actually bought into the downside," TheStreet's Jim Cramer said regarding Monday's decline on CNBC's "Squawk on the Street" this morning. "You have got a down 4.8% comps; I think people should recognize that this is the beginning of the easier comps."
After falling 20% during the month in October, comps improved during the last two months of the year. Chipotle's fourth-quarter sales fell only 4.8% due to a boost in the months of November and December.
"Some people are saying that the estimate was for down 3.7%, that is just not true. There were a lot of people that secretly thought the comp numbers would be down much more," Cramer stated.
Nonetheless, Chipotle guided for earnings well below what analysts had been expecting. "Now the earnings, 58 cents vs. 98 cents, a lot of this is costs of avocados," Cramer noted. He attested to the validity of that, as he has seen similar cost issues regarding avocados at his restaurant.
"But, I will say that they put through a lot of safety rules, and changed a lot of things. What matters is 18 months is when people forget," Cramer contended regarding the time frame for consumers to look past the 2015 food safety concerns.