Starbucks Corporation (SBUX), Chipotle Mexican Grill, Inc. (CMG): Can Panera Bread Co. (PNRA) Continue to Rise?

All three companies have strong commitments to social responsibility like Panera’s Pay As You Please community cafes and daily donations of bread to food banks, and all three take the sourcing and quality of their offerings very seriously.

But the similarities end there. Panera Bread Co. (NASDAQ:PNRA) has one tenth the market cap of Starbucks and half that of Chipotle Mexican Grill, Inc. (NYSE:CMG). Both Starbucks and Chipotle have higher P/Es and PEGs than Panera’s, just barely above the industry average. Only tiny competitor Einstein Noah Restaurant Group (NASDAQ:BAGL) has a smaller PEG of .97 and P/E of 19.82, but it also doesn’t have the big lunch and dinner business (now serving pasta) that Panera does.

Starbucks Corporation (NASDAQ:SBUX) offers a 1.50% yield (it returned $1.1 billion to shareholders in 2012), and just announced its own loyalty program for Starbucks grocery purchases and at its 18,066 locations, both company-owned and franchised. Starbucks is also an international company

At its shareholder meeting on March 20, Starbucks CEO and founder Howard Schulz announced 18% EPS growth for 2012 despite commodity constraints, almost exactly what analysts expect to be the 5 year EPS growth rate (18.57%).

Starbucks Corporation (NASDAQ:SBUX) is a good investment and its yield is as enticing as the aroma of a caramel macchiato, but I like Panera Bread Co. (NASDAQ:PNRA) better for its growth and opportunities for expansion. Don’t forget only a few years ago Starbucks overexpanded so badly that they brought back Schulz to fix the company.

When the nacho chips are down

As for Chipotle Mexican Grill, Inc. (NYSE:CMG), it is down 23.76% over 52 weeks, and competition from Yum! Brands, Inc. (NYSE:YUM)‘ Taco Bell Cantina menu as well as thousands of private Mexican iterations of its menu still leaves me cold to Chipotle.

The short interest in Chipotle is a high 15.10%, despite its already decimated share price. In its favor it has barely 1% of debt to total cash and a return on equity of 24.28%. Sentiment on the name is decidedly bearish, yet analysts predict 20.22% five year EPS growth and have a median price target of $330 for a 2% upside.

Panera will rise again

All three specialty eateries have underperformed the S&P 500, but with menu items at affordable price points and new marketing initiatives Panera Bread Co. (NASDAQ:PNRA) is the winner, and will prove it when they report in May.

S&P 500 data by YCharts

The article Can Panera Bread Continue to Rise? originally appeared on Fool.com and is written by AnnaLisa Kraft.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.