Panera Bread (PNRA) Marked As A Barbarian At The Gate

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Panera Bread ( PNRA) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Panera Bread as such a stock due to the following factors:

  • PNRA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $52.2 million.
  • PNRA has traded 372,506 shares today.
  • PNRA traded in a range 217.8% of the normal price range with a price range of $4.42.
  • PNRA traded above its daily resistance level (quality: 13 days, meaning that the stock is crossing a resistance level set by the last 13 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on PNRA:

Panera Bread Company, together with its subsidiaries, owns, operates, and franchises retail bakery-cafes in the United States and Canada. The company operates in three segments: Bakery-Cafe Operations, Franchise Operations, and Fresh Dough and Other Product Operations. PNRA has a PE ratio of 22.1. Currently there are 10 analysts that rate Panera Bread a buy, 3 analysts rate it a sell, and 7 rate it a hold.

The average volume for Panera Bread has been 530,200 shares per day over the past 30 days. Panera Bread has a market cap of $3.8 billion and is part of the services sector and leisure industry. The stock has a beta of 1.28 and a short float of 9.2% with 11.83 days to cover. Shares are down 15.3% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Panera Bread as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 5.5%. Since the same quarter one year prior, revenues slightly increased by 7.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Net operating cash flow has increased to $82.06 million or 27.03% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -5.13%.
  • PNRA's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.88 is somewhat weak and could be cause for future problems.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to other companies in the Hotels, Restaurants & Leisure industry and the overall market on the basis of return on equity, PANERA BREAD CO has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.

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