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VIDEOPanera's Earnings May Already Be Baked In
By
Justin Sharon
Jul 28, 2009 9:40 am
Thrifty consumers, increased competition are concerns.
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One to watch: Panera Bread (PNRA) is out with earnings after the close.
Its bakery cafe chains are in almost 40 states and expansion in Canada is on the agenda. The company’s "fast casual" fare is healthier than that offered by the burger behemoths and, amazingly, its stock rose even at the height of the Atkins craze a few years back. It consistently scores high in customer satisfaction surveys, but curtailed consumer spending and increased competition are a cause for concern.
An axiom of investing is: Never confuse a company’s products with its stock. A case in point is cult competitor Cosi (COSI), with flatbreads to die (if not to diet) for -- but whose stock has flatlined, and can currently be had for $0.50.
What just happened: Stocks headed higher, though yesterday’s gains of 0.1%, 0.2%, and 0.3% in the NASDAQ, Dow, and S&P are suggestive of a rally on its last legs. RadioShack’s (RSH) solid gain in second-quarter profit was met with radio silence, investors sending the shares skidding 6.6%. Stung by criticism that the emperor has no clothes, the SEC flexed its enforcement muscle and limited naked short-selling.
What’s happening: Today’s Journal reports Bank of America (BAC) is trimming its branches, literally, shuttering 600 locations. In Asia, the Nikkei fell fractionally to end Japan’s best stretch in over 20 years. Europe’s recent hot streak is in jeopardy after a profit plunge from energy bellwether BP (BP). Here at home, futures are underwater after a torrid tear kept the bears at bay. The dollar is at its lowest levels of the year. And the busiest week for sales of government debt in almost a quarter century continues with the auction of $42 billion in 2-year notes today. What will happen: In economics, May’s S&P/Case-Shiller housing index was just released and revealed a 17.1% decline. Be grateful for small mercies as that’s better than April and the fourth consecutive month of improvement. At 10:00 a.m. Eastern the Conference Board reports July consumer confidence. We’ll be learning about earnings from Capella Education (CPLA), Coach (COH), Deutsche Bank (DB), FPL Group (FPL), Hitachi (HIT), Interpublic (IPG), Jacobs Engineering (JEC), McGraw-Hill (MHP), McKesson (MCK), Norfolk Southern (NSC), National Oilwell (NOV), Teva (TEVA), and Viacom (VIA-B).
Happenstance: The current cover of Newsweek answers its question, “Is the recession over?” in the affirmative. An ominous development for contrarians who recall an (in)famous 1979 BusinessWeek front page proclaiming “the death of equities” just in time for what turned out to be history’s biggest-ever bull market. Not to mention Sports Illustrated’s celebrated cover curse.
Positions in ATVI, THQI, TTWO
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