An interview with Ronald M. Shaich of Panera Bread appeared on Page C3 of the "New York Times" on Sunday September 17th. To quote: "Next month Panera will open its 1000th store and Mr. Shaich will ring the opening bell at Nasdaq to celebrate." The interview mentions the new Lobster Salad at $14.99, the new Tart Cherrystone $2.49 and the new Apple and Sausage Crispani at $8.99. He discussed his companies no longer white hot stock and a recent "Barron's" article...Says he "Panera has been a wonder stock. The stock price rose 60% last year, but this year the stock peaked at $75.00 in April and then fell...." "We will have 2 billion in sales by the end of this year. Starbucks does $750.000 per store per year, Chipotle does $1.4 million, McDonalds does $l.85 million and Wendy does $l.30 million per store per year." Question: "Will you get to 3000 stores? "We are only 60% saturated in the USA. We are on a wonderful escelator. We are opening in Canada next year.. we are opening in the Bronx (NYC) next year..." PS- an extended version of this Interview is on line at nytimes.com/business.
Thanks for re-posting that I am sure all eight people here missed your post from yesterday. Lovely how you left out the Barron's title this time. Like I said yesterday total PR fluff piece same crap different day. He's been saying the same crap all year long while cutting earnings.
Today From Barron's
Signs are emerging that Panera's torrid growth has begun to slow. Same-store-sales gains, or sales increases at units open at least 18 months, have cascaded in recent months to the low single digits from a peak of 10.2% in January. Newer stores are doing less business, on average, than those opened before 2005. And many institutional investors, worried about constraints on the company's � and the restaurant industry's � growth, have been dumping the shares.
Panera (PNRA), which calls the St. Louis suburb of Richmond Heights, Mo., home, has lost nearly 20% of its value since hitting a high of 75.88 April 3. But the stock could fall further if recent trends persist. Short sellers are betting as much; their ranks swelled by 10.6% in the month ended June 15, to 3.6 million of the company's 30 million publicly traded shares, or 12% of the float.
EVEN AFTER ITS recent selloff, Panera fetches a lofty 31 times '06 estimated earnings, almost double that of the restaurant-industry group.
On the basis of enterprise value (market value plus net debt) to Ebitdar (earnings before interest, taxes, depreciation, amortization and rent), notes Ivan Feinseth, director of research with Matrix Investment Research in New York, the stock trades for a multiple of 14.6, versus an industry multiple of 9.6. Feinseth, one of three Wall Street analysts with a Sell rating on Panera, sees about 30% downside for the shares and pegs the company's "intrinsic value" in the low 40s per share.
"The primary reason for our Sell rating is Panera's declining return on capital," he says. "The incremental investment into each new restaurant opened is yielding a lower and lower return. Revenue and earnings per share keep rising, driven by capital investment, but return on capital is declining. As it falls, the company's ability to create shareholder value will decline."
While I understand where you are coming from, the current PNRA situation is fraught with peril for the shorts. "Big Money" (BM) (institutions + insiders) hold approximately 96% of the float at this time. Now if one then adds a short interest of 12% onto that, the math gets more than a little fuzzy. It would not take a great deal to squeeze the short situation to the upside for a sweet profit to BM. This is nicely set up.
I have been playing GOOG instead of PNRA because the pitfalls for PNRA positions, both long and short, are too great.