Panera Bread Co (PNRA), Chipotle Mexican Grill, Inc. (CMG): Fast Profits in Fast Casual

Revenue is expected to be flat in 2013 after being up 8% in 2013. China is a huge part of Yum!’s business, as the revenue from the country is double that of the U.S.

Bottom line

Panera Bread Co (NASDAQ:PNRA) and Chipotle are no longer “trade down” options from casual dining, but are competing head to head with the likes of the Olive Garden, Red Lobster, Chili’s, etc.

While there is very similar competition for Chipotle with Jack in the Box‘s Qdoba, Panera still has a solid competitive advantage. Of the two, Panera appears to be the best bet from a value perspective, trading with a P/E that’s around 60% of Chipotle’s.

Also, accounting for analysts’ EPS expectations, Panera is the best bet. The bakery-cafe company has a PEG ratio of 1.2 compared to Chipotle’s 2.8. While I like both for the long term, I think Panera is the best investment for now and would look to buy Chipotle on a pullback. As for Yum!, I’m waiting on a couple more quarters of data to see how the Chinese operations impact margins.

Marshall Hargrave has no position in any stocks mentioned. The Motley Fool recommends Chipotle Mexican Grill and Panera Bread. The Motley Fool owns shares of Chipotle Mexican Grill and Panera Bread.

The article Fast Profits in Fast Casual originally appeared on Fool.com and is written by Marshall Hargrave.

Marshall is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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