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Panera Bread Company Message Board

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  • hotpanera2 hotpanera2 Jan 30, 2003 3:31 PM Flag

    Valuation- Panera Bread, I'd leave too

    Panera uses substantially all of its cash flow to build new stores. Accordingly, free cash flow is very low. If they stopped buiding stores, you would value the company alot higher, Makes alot of sense.

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    • "Accordingly, free cash flow is very low. If they stopped buiding stores, you would value the company alot higher, Makes alot of sense."

      -- Actually its makes no sense whatsoever, and your 'logic' is downright scary. If PNRA stopped building stores, the stock would absolutely crater since at this VALUATION the EXPECTATIONS is for growth to da moon (& IMO PNRA STILL discounts the successful build-out of all of China).

      I have waited patiently for this day, and expect more like it to come. Just think of how many brokers flogged this overvalued stuff to 'unsuspecting/trusting' clients!! Think of the panic that will/is setting in.....Think of all the shares Shaich & gang have unceremoniously dumped......Think of all the additional hurt PNRA would have caused if its stock was to rise one iota from its all-time highs.....What's going on is good for the future of PNRA, good for the wellbeing of unsuspecting investors, & good for the country. Horrendously overvalued stuff should not be rewarded (or 'allowed' to suck up funds that could be used for true growth elsewhere). All JMHO...Good luck to all.....

    • I look at in a much simpler manner. SSS rate of growth is declining. New stores as a percentage of installed base is dropping, too. This has to translate into a lower rate of top line growth. 30% is a thing of the past, 15-20% may be more like it.

      Then there is the risk factor. A bad month of comps and the reality of the end of the gravy train will become blatantly evident. Then you'll see Panera dropping to meet its peers.

      While it is probably not your cup of tea if you want a long to look at with its best growth years ahead try BLTI (you can see my posts on ther since '98)

      • 1 Reply to mrexcelerator
      • You ignore the fact that overhead per store declines dramatically as more stores open. The efficiencies of the commissaries are far from being reached. I think each can accommodate something like 35 cafes and presently does less than 20. General overhead per store also declines. Things like rent for the home office, Ron's salary, audit fees, etc., etc. do not double when the store count doubles. I would be surprised if they can't increase earnings in 2004 by more than 30%.

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