There are few things I enjoy more than a good bakery. But one of those things happens to be a winning stock. Fortunately, investors can have both when it comes to Panera Bread (NAS: PNRA) .
Shares in the upscale quick-eats favorite have soared over the last few years, returning 230% since the middle of 2007. The broader market measured by the Dow Jones Industrial Average is down 2% over the same time period.
To understand how Panera has accomplished this and to see if its stock is still a "buy," I take a look at the blazing hot bakery's performance in eight vitally important areas.
Industry Rank (out of 30)**
5-Year EBITDA Growth (CAGR)
Same-Store Sales Growth (MRQ)
5-Year Revenue Growth (CAGR)
Net Profit Margin
Cash & Equivalents
Source: Finviz.com, Screener.co, and Panera's 2Q12 Earnings Release. EBITDA: Earnings before interest, taxes, depreciation, and amortization. CAGR: Compound annual growth rate. MRQ: Most recent quarter. * Median substituted for average. ** A small number of industry participants were excluded from the group to achieve a more representative sample.
As you can see, with the exception of net profit margin, Panera ranks in the top quintile in seven out of the eight categories.
Over the last five years, the company has recorded double-digit average annualized growth rates in both revenue and earnings, nearly triple the industry averages of 5% and 7%, respectively. More recently, it "blew the door" off its second-quarter earnings by revealing a staggering 27% year-over-year increase in earnings per share. Although much of this can be attributed to new locations -- Panera opened a net 29 new stores in the second quarter between company-owned and franchise-operated locations -- it also came from the company's impressive 7% same-store-sales growth.
Figures like these put Panera in rare company. At the top of the heap, is its burrito-slinging competitor, Chipotle (NYS: CMG) , which leads the industry in five-year-annualized-earnings growth at 35% and comes in second to Buffalo Wild Wings (NAS: BWLD) in revenue growth. The leader of the pack with respect to comps meanwhile is Arcos Dorados (NYS: ARCO) , the largest franchisee of McDonald's (NYS: MCD) in Latin America. For the first quarter of the year, Arcos recorded comps of 11.6%.
But Panera shines even in company like this. In the wake of Chipotle's "apocalyptic" second-quarter earnings, Panera has unequivocally become the best performing growth stock in the restaurant industry, outgaining Chipotle by over 70 percentage points and more than doubling the otherwise impressive five-year returns of McDonald's and Buffalo Wild Wings -- Arcos isn't comparable because it didn't go public until the middle of last year.
Finally, I'd be remiss if I didn't mention Panera's balance sheet. There's a lot of talk these days, particularly on Wall Street, of "fortress" balance sheets. Although this hasn't been precisely defined, if it were, Panera could easily serve as its poster child. At the end of the first quarter, the bakery had zero debt -- that's right, zip, zero, zilch -- and over $220 million in cash. Only BJ's Restaurants can claim a similar accomplishment in terms of debt, but even it has 80% less cash on hand.
What does the future hold for Panera's stock?
Trying to predict the future is a fool's errand to be sure. But if Panera maintains its current pace, there's significant room for its stock to grow. Is it worth 30 times earnings, nearly the same multiple as Chipotle's stock? Probably not. But that might not be because Panera's too high, but rather that Chipotle's too low.
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The article 1 Explosive Growth Stock originally appeared on Fool.com.
Fool contributor John Maxfield does not own shares of any company mentioned above. The Motley Fool owns shares of Buffalo Wild Wings, Chipotle Mexican Grill, Panera Bread, and Arcos Dorados Holding.Motley Fool newsletter serviceshave recommended buying shares of Buffalo Wild Wings, Panera Bread, and Chipotle Mexican Grill.Motley Fool newsletter serviceshave recommended writing covered calls on Buffalo Wild Wings. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.