Well quickly enough it’s almost earnings season again.  A prime time to make money.  Chipotle has popped like every quarter for the last 6 quarters or so - as analysts consistently underestimate this company.

This PT pick made 15% in a week in the run-up to earnings.  

http://www.prooftrader.com/symbol/CMG/819/Analysts-estimates-likely-too-low...

Let’s take a look at the numbers relevant to the quarter about to be reported.

The consensus estimate for last quarter (4Q) was 1.29.  The actual was 1.47.

Now typically Q1 is Chipotle’s weakest quarter.  Some type of seasonality there.  But Q1 2010 was 1.19.  Q1 2011 estimates are 1.25 to 1.62, consensus 1.43.  The consensus then represents a 20% increase over last year’s 1Q.  

Why might that be too low?  Well, for Q4, the year-over-year increase was a whopping 48% (from .99 to 1.47).  So if Q1 for 2011 is just as good, earnings would come in at 1.76.  That would be tough since the last three quarters have been 1.46, 1.52, and 1.47 and as I said Q1 is their toughest.  

However, the top of the estimate range 1.62 would seem plausible - it would represent their best quarter on record.  As an aside, why is 1Q seasonally weaker?  Is it people dieting perhaps?  New years resolution: I will eat less burritos this year.  I don’t know.  But that is certainly a possibility.

Since Q1 2009, they have not only beat estimates, but come in above the highest estimate, for 7 of 8 of those quarters.  That is pretty amazing.

I think with the 1.62 high estimate, it’s quite likely that streak will come to an end, but it would seem pretty easy for them to beat the consensus solidly.  Let’s say 1.53.  

I would have liked it if CMG had fallen to 265 but it didn't happen.  I will take a small bite here and predict the stock pops to $300.