McDonald’s (MCD, $58.31, down $0.37) reported earnings this morning and despite overall good numbers the stock is trading lower. The company said earnings grew 24% as net income reached $946 million, or $0.81 a share, helped by strong international sales. However, investors focused on the fact that sales fell slightly in March at U.S. restaurants opened at least a year. In pre-market activity, McDonald’s was trading at $60 but opened at $57.94.

It was interesting to hear what McDonald’s had to say because Chipotle Mexican Grill (CMG, $115.00, down $3.28) announces earnings Wednesday after the bell. It was McDonald’s who made an initial minority investment in Chipotle back in 1998 and at one point it had a controlling interest of 92%.

Chipotle went public in January 2006 at $22 a share and closed at $44 on its first day of trading. Although McDonald’s has fully divested its investment in Chipotle, at some point one has to wonder is Chipotle really worth $115 a share?

That’s for the market to decide but either way the stock is poised to make a big move one way or the other. Chipotle is nesting right below its 100-day moving average and just above its 200-day moving average. The stock hit a high of $155 on December 31 but has been in a downtrend ever since hitting a low of $90 in March.

Although these two companies operate independently, they are still tied to the hip by the U.S. consumer. McDonald’s has done a great job with its $1 menu and Chipotle seems to be the rage when it comes to quality fast-food. However, with food prices continuing to rise it will be interesting to see how Chipotle controls and manages these costs. If they disappoint Wall Street with earnings then the May 105 puts (CMGQA, $4.49, up $1.29), which are up 40% today, could continue to get some action.

Rick Rouse
Rick@OptionsMentoring.com