Chipotle Mexican Grill, Inc. (CMG), Buffalo Wild Wings (BWLD), And The Top Value Plays In This Space

Panera Bread (PNRA)Some companies are such obvious values that I have a hard time buying the shares. I'm unfortunately part of a club of non-investors in a concept I should have bought a long time ago...Panera Bread Co (NASDAQ:PNRA). Actually it's even worse than that, I owned Panera Bread Co (NASDAQ:PNRA) at one point. In fact, I bought shares when they were about $50. When the stock rose to around $75, I sold because it looked like their forward P/E ratio was getting a little high. I can't tell you how many times I've regretted that sell order. That being said, I hope to help investors learn from my mistake, and I can give you four reasons to consider buying shares today.

A Cult-Like Following I'm constantly amazed at the strength of the Panera Bread Co (NASDAQ:PNRA). In fact, the only restaurant that I've seen such a huge following for is Chipotle Mexican Grill, Inc. (NYSE:CMG). Both of these companies are rapidly expanding, expected to grow earnings by more than 19% in the next few years, and both have crazy customers.

I don't mean crazy in the sense that they don't know what they are doing, I mean crazy in the sense that lines in these stores are what I can only call epic. Panera and Chipotle Mexican Grill, Inc. (NYSE:CMG) are both located in my local strip-mall, and they are constantly busy. If you walk into either restaurant around lunch or dinner, be prepared for a line. What's amazing about both concepts is, they have a long line of customers, but they each are efficient at getting customers food ready in a relatively short amount of time.

Two other companies I link to Panera Bread Co (NASDAQ:PNRA) are Buffalo Wild Wings (NASDAQ:BWLD) and Starbucks Corporation (NASDAQ:SBUX). Part of the reason I think of Buffalo Wild Wings (NASDAQ:BWLD) is, the company is also growing fast, and is in the same strip-mall as Chipotle Mexican Grill, Inc. (NYSE:CMG) and Panera. Starbucks is a more direct competitor to Panera, and the company's purchase of La Boulange, means their expanded food offerings will make this even more true.

Believable Predictions There might not be anything more important than making sure predictions for growth are believable with a company like Panera Bread Co (NASDAQ:PNRA). Chipotle Mexican Grill, Inc. (NYSE:CMG) investors got a taste of what happened when unrealistic expectations meet harsh reality last summer. The company's same-store sales came in weaker than expected, and the stock took a 30% nosedive fairly quickly.

Panera's believable growth is the first reason investors should consider buying the stock. The company plans on opening between 7% and 7.5% new stores during 2013. When you combine this new store growth, with expectations for same-store sales growth of between 4% and 5%, you get a total of at least 11%. For a company that analysts expect to generate 19% EPS growth, a 11% or higher top line number is reasonable.

First And Second Place The second and third reason to consider the stock are the company's strong same-store sales, and their competitive operating margin. Of Panera Bread Co (NASDAQ:PNRA)'s peer group, the company is predicting strong same-store sales for 2013, and compared to their peers, no other company is predicting better results.

Chipotle is suggesting same-store sales will be flat to up by the low single-digits. Buffalo Wild Wings (NASDAQ:BWLD) and Starbucks Corporation (NASDAQ:SBUX) are both guiding that same-store sales will increase by the mid-single digits. Panera is saying same-store sales should be up by 4% to 5%. The company's tie for the lead in an impressive peer group is a strong vote of confidence for the shares.

Among their competition, Panera also carries the second best operating margin. The only company that offers a better margin is Starbucks at 15.3%. However, Starbucks has a competitive advantage that their main product is coffee, which is higher margin, whereas Panera's main product is food. Of their more food based competition, Panera's margin of 13.58% beats Chipotle Mexican Grill, Inc. (NYSE:CMG) at 13.4%, and crushes Buffalo Wild Wings (NASDAQ:BWLD) at 7.2%.

A Reasonable Value While it's hard to suggest that Panera Bread Co (NASDAQ:PNRA) is cheap at current prices, given the company's competitive position, it's hard to argue that the shares are relatively expensive either. When comparing companies that pay dividends with those that do not, I use the PEG+Y ratio. This ratio takes into account a company's yield and their growth rate, and then compares the total to the projected P/E ratio. With this ratio, the higher the number, the better the value.

To put this fully in perspective, let me show you how Panera compares to its competition:

Name Yield Expected Growth Projected P/E PEG+Y
Buffalo Wild Wings 0.00% 19.17% 24.58 0.78
Chipotle 0.00% 19.76% 34.1 0.58
Panera 0.00% 19.25% 25.2 0.76
Starbucks 1.40% 18.87% 27.84 0.73

As you can see, though Chipotle Mexican Grill, Inc. (NYSE:CMG) is expected to grow faster than Panera Bread Co (NASDAQ:PNRA), the stock is priced much higher. While Starbucks Corporation (NASDAQ:SBUX) pays a dividend, and has a competitive growth rate, the stock's higher price more than reflects its value. Buffalo Wild Wings (NASDAQ:BWLD) would seem to be a slightly better value, but the company's results have been wildly (pun intended) inconsistent, having missed earnings estimates in three of the last four quarters.

Panera's business offers fast growth, good margins, and strong same-store sales. When you combine these traits with consistent performance, you have a recipe that may help investors bake up more gains in the future.

The article The Best Value Among These Fast Growing Companies originally appeared on Fool.com and is written by Chad Henage.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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