McDonald’s Corporation (MCD), Brinker International, Inc. (EAT): These Food Stocks are a Win-Win

While McDonald’s is moaning over its falling sales, a company like Panera Bread (NASDAQ:PNRA) has positioned itself as a popular name in the industry even without a dollar menu. Panera’s net income increased by approximately 33% year-over-year in the fourth quarter of 2012, going up to $51.6 million. This was supported by the company’s operating margins, which increased by around 200 bps to 14.6%. The company has a sound portfolio of products, with its sandwiches segment witnessing a growth of around 34% in the last quarter. Panera will be launching new pasta dishes towards the end of the first quarter of 2013, which can act as a positive catalyst for its lunch and dinner sales.

Moving forward, the catering business remains a strong opportunity for Panera Bread to grow its customer base. Currently, this segment contributes just around 7% to the total sales. However, the recent growth of 21% in this segment in the fourth quarter has been impressive. During the first half of 2013, the company is focusing on certain new initiatives to gain from this opportunity. These include new web-based ordering system that will drive down its costs, thus enhancing its profitability. Overall, I believe the catering business will grow to a level of around $500 million in revenue over time.

For the investors

The stock price of Brinker offers an attractive opportunity with the EPS estimate of around $2.62 for its fiscal year 2014, a dividend yield of 2.5%, and around $500 million of expected share buyback program.

But, I remain doubtful about McDonald’s (NYSE:MCD) in the short-term due to rising competition in the industry. But the long-term prospects seem favorable, with its initiatives in the Dollar Menu and the improving US performance.

On the other hand, Panera Bread is one of my favorite picks for 2013. Along with the growing sales of its signatures items and the upcoming launches, its catering business also gives me confidence about the future prosperity.

The article These Food Stocks are a Win-Win originally appeared on Fool.com.

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