Panera Bread (PNRA, Financial) has been a great long-term stock for investors over the last five years as it has moved higher consistently. Although the company is still reporting decent growth, it has dipped almost 10% from its 52-week highs.
In the most recent quarter, Panera Bread shared earnings per share of $1.37, 3 cents more than the estimates. The company’s revenue came in at $684.2 million, a surge of approximately 3% and $3.71 million greater than the estimates. Although the company’s growth has slowed down, it is still inching higher at a decent pace.
The company has focused on preserving its momentum whereas several other players in the industry are still facing the wrath of a decelerating customer environment. Panera Bread displayed 4% comperable stores surge in the second quarter which was much better than its rivals. This clearly suggests the company is snatching market share from other players in the industry.
On the other hand, Panera Bread has several strategic plans it expects to take the company to great heights. The company is putting in a lot of effort to make its bakery-cafes superior competitive alternatives so that it can entice consumers.
Furthermore, it also has plans to build prolonged runways for growth in adjacent $1 billion businesses, which have the potential to boost the company from $5 billion to $10 billion in systemwide sales. To achieve these goals, the company is taking various steps such as innovation in food, operations and marketing.
In terms of product offerings, Panera Bread still has sufficient room for growth. Aside from the quality and natural ingredient appeal, almost every food offered by the company comes in the category of cold food, massively adaptable to a catering pickup business model compared to hot foods.
Panera Bread is a great company because it has a robust balance sheet. In addition to the strong balance sheet, the company’s management clearly knows how to act and tackle any kind of bad situation. Hence, investors should use the recent pullback to add to their positions.
Conclusion
Panera Bread has been growing at a rapid rate over the years. Although the company’s growth rate has slowed down, it can still move higher. With a price-earnings (P/E) ratio of almost 32, there may be better buying opportunities for investors in the near term. However, long-term investors can add the stock at current levels as well.
Disclosure: I don't hold a position in the stocks mentioned in the article.
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