I just feel it is still way over-valued; especially with such a high p/e. I don't have any interest (i.e. not a stock holder) but I have been watching it closely looking for an entry point but it looks to be heading in the wrong direction. They had a great run in 2005 but I can't see anything that makes me believe that it will approach the 70's again too soon. Maybe if they introduce the pizza that some have written about on this board or, even better, if they annouce some international store openings. I just feel there are better investment opportunities right now but I will continue to follow this one closely. Good luck to you.
You are correct. There is no need to further stimulate lunch traffic. Capacity is now constraining lunch volume at many, many units.
Dinner is where most of the action in 2006 and 2007 will be, at the individual stores, now that Natural chicken has been introduced so successfully thoroughout the system. After Panera is using its existing store investment for all three meals national advertising to further stimulate customer patronage, image enhancement and recognition, and driving home the message of the "Panera Experience" will take the entire enterprise to a higher level of national esteem. The future is indeed bright because this management team continues to create new low hanging fruit possibilities, then executing to "pick" that fruit to the company's benefit. Really, this group that the CEO has assembled and motivated, is the best in their field. Even their competitors have voted them the best management in their sector....Three years in a row !!!
As usual you are spot on with everything in your message save one small item....the extensive testing has been completed successfully. Much was done in Rochester, N.Y. and other areas "East". Results were very strong so the decision to roll it out at a rational cadence (Ron's style) has been made. Much is still to be learned and refined, as it has been with Via Panera, where tweaking is still underway to refine techniques to optimize penetration of the service. The learning never stops at Panera as you know. The second half of '06, my guess, will see the first meaningful SSS benefits from Crispania. 2007 will be the first full year of "Good Evening" at most Panera stores.
Have been shorting and selling August puts against some; good volatility with August 60 at $4.10- 40% volatility.
I am mildly bullish the market for 2006 but when you are long 25 stocks it doesn't hurt to be short a couple.
Was convinced by Merrill piece.
The "pizzas" would only be available after 4:00 P.M. They don't need them at lunch and won't have them then.
The "pizzas" being tested are, as I understand it not having seen them, individual flatbread thin crispanis with about 4 available toppings. It would be nothing like a slice at a pizzeria. Many moderate Italian restaurants serve thin pizzas, and this would be along those lines. Nothing that would cheapen the Panera name, but hopefully something that would make dinner of interest to more people. They will only be rolled out if, after carefully being tested, they prove sufficiently popular. If a desperate company needing sales were doing this, I'd be very concerned. With Ron, I have complete trust that it will only be done systemwide if it is shown to work. That means increase sales in the eveining, no cheapening of the brand, no major logistics problems, etc.
I think this is a long term growth story. P/E isn't that high when you consider the growth rate. You have to pay for growth. If you can find me something growing at a high rate with a low multiple, let me know.
All that said, I am waiting to put more cash into this one (ie. when the technicals look a little better).
"I just feel it is still way over-valued; especially with such a high p/e."
"been watching it closely looking for an entry point but it looks to be heading in the wrong direction"
So you don't like it with a high p/e, and you don't like it now that the p/e is falling... you seem confused. I'm really interested to hear a decent short argument. Citing a high p/e is nonsense. High growth yields high p/e's. There is nothing to indicate that the growth is slowing. In fact, it seems to be accelerating. I hope they don't mess with success and start selling pizza, that would be nuts at this point. They're packed for breakfast, lunch, and dinner and they've yet to even saturate their home market of St. Louis. The best way to make money in a company like this is to take a perma bull position and buy the dips. Any correction is further reason to buy. I like to get overweight on these dips and sell a little at the highs. I waited patiently for it to break below 67 and I'm elated to see a few misguided shorts showing up. Should lend a near vertical rise to the stock sometime around earnings as you all run to cover.
Can someone give me a decent short argument beyond valuation? Betting a stock will fall on a valuation basis, while the company is beating its own and wall street's expectations, is a sucker's bet.
I can give a short argument. Go to stockcharts.com. Expand the size to wide, make the time frame one year, and change the moving average lengths to 21 and 8. Study and analyze what you see, then post it here.
Your exactly right! There is no reason to short this stock. Maybe you can argue valuation in the short run, but not in the long run. This company is still a baby! Lots of growth ahead. Everyone I talk too loves this company. This is a winner. No reason to short!
Disagree about the pizza. Panera's menu is essentially a wonderful lunch menu, plus baked goods and beverages for all hours of the day. Just like the soufflet's gave a nice kick to breakfast, adding pizzas to dinner, if done right, can be a large catalyst. Someone leaving a movie or store at 8:00 P.M. may not be in the mood for a sandwich or salad but might very well be interested in pizza. It can't, and won't from what I have read, be a slice that you can get at a local pizzeria. It will be a good cut above (after all Panera knows how to do bread) and could give a meaningful push to dinner sales. While some locations are undoubtedly busy for dinner, given that dinner is only about something like 1/3 of lunch business there is
is clearly room for growth. New menu items is a way to do it. The key is that Panera will not launch anything until they know it is going to sell.
While EPS growth continues to be strong, new store openings are remaining at about 150 which is what Ron feels comfortable with. That requires a new growth engine as the % of growth by new stores will necessarily decline as the base has been increasing. Dinner can help a lot.