CNBC's Jim Cramer on Wednesday said earnings season has reached the point of "maximum disorientation."
Wall Street is flooded with more quarterly reports than investors can keep track of and the action makes little if no sense at all, the "Mad Money" host said, highlighting a peculiar 1.2% rise in Caterpillar shares and 5.2% slide in those of Chipotle Mexican Grill.
"Caterpillar disappoints and roars higher, Chipotle knocks it out of the park and gets hammered, but it all makes sense when you consider the expectations coming into the quarter," he explained. "No, the market hasn't lost its mind, there's just more going on than you may be aware of."
Caterpillar's sales came in at roughly $12.7 billion in its third quarter, well short of the $13.4 billion that analysts estimated, according to FactSet. The stock price declined quickly at the market open, bottoming under $131 per share, before closing at $135.34.
"This is not the same old Caterpillar, where a shortfall like the one that we saw this morning would result in giant layoffs, a suspension of the buyback and maybe even a dividend slice," Cramer said.
CEO Jim Umpleby, he noted, pledged to mitigate Caterpillar's episodic business model that made it a tough industrial stock to own. The "new" Caterpillar is doing more with less, he added.
"If you were listening to the conference call, you could tell the moment when the bad story turned good, because it's when the analysts' ... questions created a very positive impression," Cramer said. "This new CAT is the kind of industrial you can stick with during a downturn. Rather than worrying about CAT, I think you should buy it into weakness, knowing you'll be protected by that buyback and that dividend."
Chipotle had a roller coaster of a trading day, surging above $814 before ending the session at $788.19. The restaurant company shattered quarterly estimates, turning in $3.82 earnings per share on $1.4 billion revenue. Same-store sales had double-digit growth, compared with the 9.3% that Wall Street expected.
Although it lost more than 5.16% of value during the trading day, Chipotle's shares are up more than 82% this year.
"When I look over that quarter, I think you're being given a rare buying opportunity here," Cramer said. "It had 11% same-store sales growth, for heaven's sake. The stock was due for some profit-taking."
Disclosure: Cramer's charitable trust owns shares of Caterpillar.