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Panera Bread Company Message Board

  • techstrategy techstrategy Nov 18, 2011 10:49 AM Flag

    Cabal colluding here... No matter... It will break down soon enough...

    The games in the market are ending. Real world valuations are coming (and a mature company like PNRA doesn't come close to justifying these multiples).

    In the last period of stagflation (a significant probability at this point), multiples went below 10... The greedy institutional longs playing the slow distribution game are going to lose here they same way they have in all the bubble stocks (this isn't quite a MOMO/bubble stock, but it is WAY out of line with reasonable valuations nonetheless...).

    Until next month...

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    • With what is coming, only companies with big cash stockpiles, high margins and unique competitive positions will weather this well.

      PNRA has zero chance of holding its current valuation through 2012. It surprises only because the cabal is colluding. But, eventually, when the stress gets high enough, that breaks down...

    • All good points in this thread. But with all the marco and micro analysis, TA and non-TA analysis, sometimes all of that is thrown out the window as companies suprise investors during difficult economic times.

      Anyone have any thoughts as to why that sometimes is the case in the retail industry for "non-essential goods"?

    • Thanks well thought out.

      As indicated I will take a look and might get my feet wet. I like you learned the hard way to trade with caution.

      Been a great week.

    • I will be posting more over the coming month... Just as was the case with NFLX, LULU and GMCR, I am probably a little early. But, as you've seen with those, I will be here for the descent.

      Part of the issue is macro. Growth stocks as a class are going to get hit. The reason Apple and Google won't is that they are hypergrowth trading at multiples less about 1/2 to 1/3 of Panera ex-cash... Companies like this with high fixed cost structures (the nature of retail) and modest margins without huge cash positions will be significantly more vulnerable to a downturn. The impact is non-linear, so to speak.

      If you step back and think about the big picture in historical terms, aside from the short squeeze manipulation that propped up all the little MOMO "growth" companies, why would one choose to hold PNRA trading at 32TTM that is tremendously exposed to US consumer weakness rather than a large cap company with lots of cash, a lower TTM and FE multiple and international leverage?

      A 30TTM multiple for a company like this IS a bubble valuation by historical standards. When one is close to peak earnings (and I definitely believe PNRA is close to peak), it makes it even more risky...

    • So you believe that the service will contract with the coming slow down? They seem to be doing fairly well with the current slowdown having gone from 60 customers a day to 6 million customers a week. Does their products have an issue? Speciality breads are getting more and more important to health concious people. May be a good short and would like to listen. I will do some more research as I must be missing something. You were fairly accurate on GMCR and Lulu so it would be interesting to hear what you think.

    • I've been tracking the price movement and volume here. All I can say is the institutional longs deserve the shellacking they are going to get when the volume starts to return. The fast money will take it down so fast, they'll be selling into a freefall...

      The HFT will be able to take this down 5 points per day easily once they start to focus the machines on taking it down rather than propping it up... No one wants to buy at these levels, especially with all the macro uncertainty...

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