Does anyone have a speculation as to how PNRA's current market capitalization reflects the present value of future dividends or share repurchases?
Before buying a stock I find it worthwhile to ask myself whether I would buy it if I had to rely only on dividends and share buybacks--not a sale--for return on investment.
If you think the proper way to value Panera is based upon future dividends or buy-backs, you won't get very far. Pnra puts all its cash flow into building new stores. The ROI is so high that paying dividends and/or buying back stock and thereby slowing growth, would make no sense. Having some debt, whether for dividends, buybacks or quicker build-out arguably might. But I understand management's reluctance to have debt which hurt them in the old ABPCA days, or to grow any faster than 2-3 new stores a week.
Eventual cash returns to investors, however far out in the future and in whatever form, are ultimately the ONLY way to value an investment (in my opinion). What other reason is there to invest?
Reinvestment of cash flow is a certainly a great idea when ROI is high. You seem to be of the opinion that the return to shareholders will be delayed but great enough to have a present value sufficient to justify the current market cap.
Basic finance theory stipulates that stocks are valued on the present value of future cash flows. Dividends are a proxy for cash flow. Just because a company does not pay them now doesn't mean that their ultimate payment should not be factored in.
If you are waiting for a company to start paying out dividends or repurchasing shares or waiting until they begin some discussion of these topics means you will miss the boat on a lot of stocks. Look Dell, Starbucks, EBAY and others have made millionaires out of a lot of people and none of them ever paid a dividend.
Wise investors saw their potential early on before they became double digit multi-billion market cap companies. They saw the company's potential they could care less if the company ever planned to pay dividends or repurchase shares anytime in the future. Stock price appreciation is how you make the biggest profits in the market return of cashflow to investors is nice too but usually comes later after the company has matured.
It is not necessary to wait for dividends or share repurchases to commence before buying a stock since great cash flows in the distant future have substantial present value. However, the cash return must eventually occur for the stock to have any value at all.
Even Berkshire Hathaway will pay a dividend some day.
Don't feel gloomy about the possibility of a PNRA dividend. It may be far in the future and quite large as a percentage of your cost basis--in other words, more than worth the wait. That's what growth is for!
You are speaking in academic theory lingo, not the reality of investing. However, to the extent, if any, that you were correct, there is the same sort of ultimate ability to collect with Pnra as there would be with any growth stock that pays no dividends and has no expectation of paying them. E.g., Csco. Pnra is very unlikely to ever liquidate, they could conceivably be taken over (my choice suitor would be WFMI -- great synergies), and they will only pay a dividend if they have nothing better to do with the money. In that event, which I don't expect to ever occur -- they'll buy another concept if growth of this one ever ends-- it would be time to sell.
No, they're not morons. They're looking forward to an eventual cash return or selling to someone else who is. Nobody sane would ever own anything that had no chance of providing a yield some day. Berkshire Hathaway is logical in delaying dividends until the day (however far in the future) that internal ROI is too low to justify not paying them, but the delay will not be eternal.
pjv2xyw9dww4b5 are you familiar with the M&M dividend theory by Franco Modigliani and Merton Miller? Remember that some companies and investors choose to have the cash returned in the form of capital gains. The two theorized that valuation is determined by the income produced from assets, indifferent from the choosen dividend policy.