John D. signed up to do Investools investor education and tackled an analysis of Panera as one of his first 4M companies. Good timing, considering we’re looking at Panera this week. I helped him out with some of his spreadsheet calculations, and he got back to me with some research about PNRA’s management. See below.
To: Phil
From: John
Date: July 18
Phil –
Please check this – I did this on Panera Bread Company using the Investools website for info. Let me know if I’ve got it right now, or where I need to fix the formula. Thanks for the help.
John
| Sticker Price and MOS Calculation | |||
| Stock Name: | PNRA | Panera Bread Company | |
| per your instruction | # of years | 10 | |
| (Growth 50% on Snapshot, but used Zach’s low of 20%) | Growth Rate | 20.0% | Lower of Historical or Zach’s |
| From Corpoarate Snapshot (EPS) | EPS | $ 1.90 | |
| from Corp Snapshot (previous close) | Actual Price | $ 60.86 | It doesn’t fit the MOS! |
| Est Future PE | 40 | Looks Great – under 50!! | |
| Future EPS | $11.76 | ||
| Value Per Share | $470.57 | ||
| Sticker Price | $116.32 | ||
| MOS | $58.16 |
Hi John,
To get the right number on PNRA we need three things:
1. Current EPS which is 1.39 (and I see that Investools put it at $1.89 but that is not correct. Might be a bug in their data.)
2. Estimated EPS growth rate Zacks puts at 25% and which is lower than historical
3. Estimated PE which is 43 historically and that is less than 2 times 25. Now we can get the Future EPS by either an excel =FV() or at Investools by doing a valuation. Since they have the wrong EPS you can’t use Investools so you have to do the formula. It gives us $12.95 per share. Multiply that by the PE and you get a price per share in ten years of $518. Since we want at least a 15% return per year, we calculate the Sticker Price today at $138. Half of that is the MOS – $69. Panera is selling for $60 so it’s a go if it is 4M for you.
Personally I like it a lot. So tell me about their CEO. Do you trust the guy/girl? Wanna marry them?
Phil
To: Phil
From: John
Date: July 26
Phil –
Thanks for the help on MOS.
I did some research on the CEO and management team. He was one of the founders of Au Bon Pain and brought many of the management team with him when he bought out Panera. He also picked up the development guy from Starbucks to look to grow the number [of] stores in the next few years. Since both of those other companies have done well in the past, I thought that management-wise, this is good. Beyond that, the CEO has won numerous awards and has been involved in the community. He seems like a stand-up guy. He’s 49, so he’s still got some years of building to go. I wouldn’t want to marry the guy – I have a wonderful wife who is much better for me – but I would invest in his company.
Be blogging with you,
John D.
Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence.