It's always fun to reserve a seat and look at some of the restaurant stocks that have achieved some impressive levels of growth and popularity. P.F. Chang's China Bistro (NYSE:PFCB) happens to be one of them, and the company reported increased profits today. However, given recent history, there might be good reason for investors to think before paying up.
The company's first-quarter earnings came in at $10.8 million, or $0.40 per share, compared with last year's first-quarter loss, the result of a non-recurring charge caused by partnership accounting. Total sales for the first quarter increased 18% to $194.2 million. However, the company preannounced this at the beginning of the month, revealing that same-store sales increased 2.9% during the course of the quarter.
For the future, though, P.F. Chang's forecast 2005 earnings of $1.52 per share. That's four cents less than previous guidance because of a coming lease accounting charge. Analysts had previously expected earnings of $1.55 per share for the year.
P.F. Chang's may have had the reputation of producing some great growth numbers, which was borne out in last quarter's stellar showing. However, even last quarter, the idea that the stock was trading at premium levels was an issue.
Figuring in the stock's dip today and the adjusted earnings guidance, P.F. Chang's shares are still trading at a forward P/E of 38, despite slowed profit views since last quarter. Although it's arguable that the company's positive attributes make the case for a premium, that sounds a bit pricey compared with some of the other high-growth restaurants out there. (For example, take Cheesecake Factory (NASDAQ:CAKE), which is trading at a forward P/E of 24 -- although investors recently took a bite out of the price because of concerns about growth.) Investors may wish to wait for more of a chef's special before ordering up shares of Chang's.
If you're hungry for restaurant stocks, check out some recent Foolish coverage and commentary:
- Does everybody love cheesecake?
- After tough times, Cosi (NASDAQ:COSI) continues to climb.
- Are investors missing a rare opportunity from RARE Hospitality (NASDAQ:RARE)?
Alyce Lomax does not own shares of any of the companies mentioned.
