As I wrote last month, the company needs a more even rise. While its top line has a compounded average annual growth rate of 28.6% over the past two years, diluted earnings per share have managed to grow only 10.6%. Even worse, cash flow has decreased at a rapid annual clip of approximately 34% over the same time period.
Although higher expenses for labor and raw materials have nibbled away at the company's profits, management raised its guidance based on its "progress of margin improvement initiatives." The company now anticipates earnings of $0.35 to $0.37 a share, up from its previous guidance of $0.32 to $0.34.
No doubt, the company makes wonderful smelling and tasting bread, as well as great sandwiches, soups, salads, and an assortment of bagels and rolls. It is a fun place to hang out, and thanks to Panera's Wi-Fi connections, you can even bring your laptop. I'd rather go there than to Starbucks
Many companies are facing similar rising costs, and Chipotle's
Panera is a Hidden Gems Pay Dirt pick. Chipotle is a recommendation of both Rule Breakers (the "A" shares) and Motley Fool Hidden Gems (the "B" shares). Starbucks is a Stock Advisor pick. Try out any of these services free for 30 days.
Fool contributor Larry Rothman is happy to receive feedback, and he promises to read it when he's not being wrestled by his three children. Feel free to email him at firstname.lastname@example.org. He doesn't have any positions in the companies mentioned. The Fool has a disclosure policy.