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Chipotle Mexican Grill, Inc. (CMG - Analyst Report) is set to report its fourth quarter and full year 2013 results on Jan 30, 2014. In the last quarter, it delivered a negative earnings surprise of 3.97%. Let’s see how things are shaping up for this announcement.

Factors to Consider

Chipotle Mexican Grill’s third quarter results were largely hurt by an increase in food, beverage and packaging costs. For the upcoming quarter also, the company expects continued pressure from higher food costs. Particularly, for avocados, one of the important ingredients, the company expects demand and supply to remain imbalanced, thereby increasing costs. In fact, it expects food costs to remain in the range of 33.5% to 34.0% for the next few quarters. Moreover, since the company is now using non-genetically modified organism (GMO) sunflower and rice bran oils instead of GMO soy oil, costs have also increased.

Given the trend over the past three quarters, comps are expected to improve in the fourth quarter driven by improving traffic. The company expects comps to grow in mid single-digits, thereby driving sales. With its ‘Food with Integrity’ program, the company seeks to provide better food quality by not only using fresh ingredients, but also sustainably-grown and naturally raised products such as pork, chicken and beef.

Earnings Whisper?

Our proven model does not conclusively show that Chipotle Mexican Grill is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here, as you will see below.

Zacks ESP:  The Earnings ESP is 0.00%.  

Zacks Rank: Chipotle Mexican Grill carries a Zacks Rank #3 (Hold) which when combined with a 0.00% ESP makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other consumer staples companies you may consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:

Jack in the Box Inc. (JACK - Analyst Report), with an Earnings ESP of +1.54% and a Zacks Rank #2 (Buy).

Texas Roadhouse, Inc. (TXRH - Snapshot Report), with an Earnings ESP of +4.35% and a Zacks Rank #2.

The Hershey Company (HSY - Analyst Report), with an Earnings ESP of +2.35% and a Zacks Rank #2.