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  • Panera Bread Looks Attractive, But Chipotle Mexican Grill Could Be Over Valued In The Market In My Opinion. 1 comment
    Aug 19, 2012 11:33 PM | about stocks: PNRA

    Panera Bread Co. (PNRA-NASDAQ) versus Chipotle Mexican Grill, Inc. (CMG-NYSE)

    Panera Bread Co., I believe, is attractively valued in the market with its price/earnings ratio and price/sales ratio of about 29.9X and 2.3X, respectively, versus respective ratios of about 35.7X and 3.7X, for Chipotle Mexican Grille (CMG-NYSE). (Ratios are calculated based on results for the last four quarters.) Furthermore, I believe that Panera Bread would still be the most attractive of the two stocks, despite its comparison of return on assets of about 14.86%, versus about 18.60% for Chipotle, and return on equity of about 21.57% for Panera Bread versus about 23.84% for Chipotle. My opinion is based on Panera Bread's cash flow for the last four quarters of about $118.90 million, versus about $53.80 million for Chipotle. (My cash flow figures are estimates based on operating cash flow minus cash used in investing activities.)

    Taking a different approach to comparing these two stocks, it is interesting that Panera Bread shows a growth rate in earnings per share of about 30.31% for the last five years, versus about 36.53% for Chipotle, although Panera's stock price is up about 54.30% from its 52-week low of about $100.26, versus an increase for Chipotle of only about 7.92% from its 52-week low of about $271.53. I believe that this inconsistency could indicate a future slowdown in Chipotle's growth rate in earnings per share.

    In looking at the trends, Panera Bread's stock price of about $154.70 is just above its 200-Day moving average of about $152.26, while Chipotle's stock price of about $293.04 is substantially below its 200-Day moving average of about $388.31. This would tend to indicate that Chipotle's stock price has been negatively affected by something, perhaps its less than stellar cash flow results of late.

     

     

          Panera vs Chipotle    
          8/19/2012     
     PNRA2Q20121Q20124Q2011 CMG2Q20121Q20124Q2011  
     REVS530.6498.6495.8  690.9640.6596.7  
     %CHG6.42%0.56%   7.85%7.36%   
     NI44.141.238.6  81.762.757.5  
     %CHG7.04%6.74%   30.30%9.04%   
     NPM8.31%8.26%7.79%  11.83%9.79%9.64%  
    $79.60CF$38.40-$5.90$47.10 -$17.20$42.50-$72.80$13.10  
     %CHGNANA   NANA   
     CF%REV7.24%-1.18%9.50%  6.15%-11.36%2.20%  
    $2.73CF/SH$1.32-$0.20$1.61 -$0.54$1.34-$2.30$0.41  
                

    Disclaimer: The author does not own or beneficially own any investment securities or have a financial interest in any of the companies mentioned in the above article, and was not compensated. Although some information I may believe to be true, I make no representation as to any of its truthfulness, correctness or accuracy, and this report contains opinion and speculation. Nothing in this report is to be construed as investment advice, and nothing in this report is a recommendation or solicitation.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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  • Robert Christopher
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    Author’s reply » Regarding Chipotle Mexican Grill, I believe this company's future growth faces two challenges: First, I believe that Chipotle has had some difficulty with attempting to increase menu prices without losing customers. Second, in my opinion, the company's net cash flow, after investments and capital spending, could have been inadequate at times. I would think that Chipotle's future growth rate in earnings per share would be impacted by these considerations, and could be significantly less than its impressive growth in recent years.
    20 Aug 2012, 07:42 AM Reply Like
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