The firm lowered its rating on the chain bakery and restaurant based on a valuation call, decreasing same-store-sales growth, mixed trends and limited earnings visibility.
TheStreet Ratings team rates PANERA BREAD CO as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate PANERA BREAD CO (PNRA) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, notable return on equity, good cash flow from operations and increase in net income. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 4.8%. Since the same quarter one year prior, revenues rose by 15.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- PANERA BREAD CO has improved earnings per share by 12.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PANERA BREAD CO increased its bottom line by earning $6.82 versus $5.89 in the prior year. This year, the market expects an improvement in earnings ($6.93 versus $6.82).
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, PANERA BREAD CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has significantly increased by 95.66% to $136.91 million when compared to the same quarter last year. In addition, PANERA BREAD CO has also vastly surpassed the industry average cash flow growth rate of -78.76%.
- The net income growth from the same quarter one year ago has exceeded that of the Hotels, Restaurants & Leisure industry average, but is less than that of the S&P 500. The net income increased by 5.1% when compared to the same quarter one year prior, going from $51.61 million to $54.25 million.
- You can view the full analysis from the report here: PNRA Ratings Report