How Much Upside Is Left in Panera Bread Stock Price?



Stock performance

Although Panera Bread (PNRA) posted better-than-expected 3Q16 earnings on October 25, 2016, its stock price fell to $186.70 on November 4, 2016. Since then, the stock has been on an upward momentum. As of November 29, 2016, PNRA stock was trading at $211.80, a rise of 13.4% from November 4, 2016.

Apart from the measures adopted by Panera to improve its same-stores sales growth, the victory of Donald Trump as the next president of the United States also contributed to the rise in PNRA stock. Investors expect Trump to loosen regulations, which could be beneficial to restaurant chains.

If Trump repeals or changes the Affordable Care Act, commonly known as Obamacare, restaurants could be relieved of employees’ health insurance expenses. Investors are also expecting Trump to not raise the federal minimum wage.

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Year-to-date performance

Year-to-date, Panera stock has risen 11.0%. During the same period, its peers Chipotle Mexican Grill (CMG) and Shake Shack (SHAK) have returned -12.0% and -4.6%, respectively. This year has been tough for fast casual restaurants due to the widening gap between the cost of eating at home and the cost of dining out, as well as a slowdown in the US economy.

In comparison, the Consumer Discretionary Select Sector SPDR ETF (XLY) has risen 7.4% year-to-date. XLY has more than 9.5% of its holdings in restaurant companies, including McDonald’s (MCD), Starbucks (SBUX), and Yum! Brands (YUM).

Series overview

In this series, we’ll look at analyst estimates for revenue, EBIT (earnings before interest and tax) margins, and EPS (earnings per share) for the next four quarters. We’ll also look at Panera’s valuation multiple, recent analyst recommendations, and target prices for the next 12 months.

Let’s start by examining analysts’ revenue estimates for the next four quarters.


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