Investors in fast-growing companies seem to invest with a shoot-first, ask-questions-later mantra. And earnings results that they might see as terrific at other companies are met with disappointment and frustration. This cycle seems to repeat over and over again, as investors go from wild optimism to a nothing-is-good-enough mind-set. For long-term investors, these short-term pullbacks can spell opportunity, and it seems that is what Panera Bread Co (NASDAQ:PNRA) investors are being offered today.
I wouldn't call this disappointing One of the primary things investors look for from fast-growing restaurants is strong same-store sales. Companies like Chipotle Mexican Grill, Inc. (NYSE:CMG), Buffalo Wild Wings (NASDAQ:BWLD), and BJ's Restaurants, Inc. (NASDAQ:BJRI) could all be considered competitors to Panera Bread Co (NASDAQ:PNRA). Each of these companies offers reasonably priced meals, convenience, and its own unique brand identity.
Chipotle Mexican Grill, Inc. (NYSE:CMG) and Panera Bread Co (NASDAQ:PNRA) have actually been on similar growth trajectories in the last few years. Both companies have reported strong same-store sales growth, investors bought the shares, and their growth stories seem to be intact. However, a few quarters ago Chipotle Mexican Grill, Inc. (NYSE:CMG) reported same-store sales growth that was below investors' expectations, and the stock sold off. However, in Chipotle Mexican Grill, Inc. (NYSE:CMG)'s last quarter, its same-store sales growth was 5.5%, and investors seemed to forget the past, as the stock sits near its 52-week high.
Panera Bread Co (NASDAQ:PNRA) seems to be getting little credit for its growth, as the company reported same-store sales growth of 3.8%. When you consider that Buffalo Wild Wings (NASDAQ:BWLD) reported identical same-store sales growth in its current quarter, you have to wonder why Panera Bread Co (NASDAQ:PNRA) sold off, while Buffalo Wild Wings is soaring. We can take this comparison even further by looking at BJ's Restaurants, Inc. (NASDAQ:BJRI)'s same-store sales growth of just 0.4% in the company's most recent results. When you realize that BJ's sells for a forward P/E ratio higher than Panera Bread Co (NASDAQ:PNRA)'s, you have to wonder what Panera has to do to impress investors.
Two times second-best Oftentimes a company can be a great investment even without being the best at everything. In fact, it's nearly impossible to find a company that leads its competition by every measure, so what investors should do is look for a company that performs well across the board. Panera is a perfect example of this, with the second-best operating margin of its peer group, and the second-best free cash flow generation as well.