Panera Bread Co (PNRA): Is This Stock the Next Starbucks Corporation (SBUX)?

Page 1 of 2

Every investor has a story about the big winner they missed. Consider Starbucks Corporation (NASDAQ:SBUX), which grew from a single Seattle cafe into a worldwide retail titan. Since the company’s initial public offering in June 1992, Starbucks has earned 9,340% for investors.

Panera Bread (PNRA)

Today, Starbucks is a mature business. So for big profits, investors should be looking for the next Starbucks among smaller companies with similar characteristics, a long growth runway, and a reasonable valuation.

So, does Panera Bread Co (NASDAQ:PNRA) meet that criteria? Here’s three reasons why Panera could be the next multi-bagger.

Rapid growth

Panera is in a marketplace sweet spot. Consumers are looking to substitute burgers and fries for wholesome food at reasonable prices.

And this is exactly what Panera Bread Co (NASDAQ:PNRA) offers. High quality meals with an emphasis on fresh ingredients and antibiotic-free meats.

Results are showing up on the financial statements. Over the past five years, sales and earnings have grown at a 15% and 25% annual clip, respectively.

Going forward, analysts project Panera to grow its EPS at a 20% rate over the next five years driven by three factors:

Expansion: The company has the potential to double its store count in the United States with international markets almost completely untapped.

Same Store Sales: Panera Bread Co (NASDAQ:PNRA) is growing same-store sales at a mid-single digit clip. The company’s catering service is gaining momentum and now accounts for 8% of total revenue. Panera is also driving traffic through new menu items like the shrimp and soba noodle salad. Yum!

Margins: Falling wheat prices and labor costs should allow Panera to expand margins.

Perhaps, the biggest threat to Panera may be Starbucks Corporation (NASDAQ:SBUX) itself. Last summer, the company acquired La Boulange for $100 million in an effort to beef up its food offerings.

Today, only one third of Starbucks’ transactions involve a food item. But management is betting better sandwiches and biscuits could increase traffic and steal sales from rivals like Panera.

Execution

Founder Ron Shaich is one of the most successful CEO’s in history. Shaich has over 30 years of experience in the retail business and has built 1,600 stores across North America. Under his leadership, Panera has become the 14th largest fast-food chain in the United States.

Panera’s financials are in even better shape. The company has no long-term debt, which gives management ample financial flexibility to execute its growth strategy.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

The 10 Most Peaceful Countries in the World

5 Big Reasons Communism Failed

The 15 Most Famous Carl Icahn Quotes

10 Scary Animals that are Actually Harmless

The 8 Most Famous Singer-Actors in Entertainment

The 10 Longest Wars of All Time

The 13 Worst Looking Foods that Taste Great

The 6 Most Gruesome Injuries Suffered During a Sports Match

The 20 Biggest Contracts in MLB History

The 7 Worst Blown Calls in Sports History

7 Free Ways to Advertise Your Business Online

The 18 Best R&B Songs of the 90’s

The 10 Most Dangerous States to be a Cop

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!