Panera Corporation vs. Einstein

1363 WordsJul 13, 20186 Pages
Panera Corp. (“Panera”), a bakery concept, is one of the largest food service companies in the United States with 1,777 locations nationwide. Einstein Noah Restaurant Group (“Einstein”), a competitor of Panera, is an operator and franchisor of coffee cafes. This paper seeks to analyze the financial information of these companies to determine which company is performing better. In Part A, I will examine liquidity and coverage ratios, assessing each company’s ability to meet its debt obligations in both the short and long term, to pay dividends, and to cover its expected operating expenses. Next, in Part B, I will inspect profitability ratios, assessing the ability of each enterprise to provide its investors with a return on their…show more content…
Additionally, Panera improved its interest coverage from 2012 to 2013, while Einstein did not. This is a positive signal of Panera’s overall health and shows that Panera is in an excellent position to weather possible financial storms. B. Profitability Ratios 1. Earnings Per Share (EPS) Panera’s EPS is significantly higher than that of Einstein in both 2013 and 2012. While Panera’s EPS is around $6 for both years, Einstein’s is only around $0.80. Although the earnings per share of both Panera and Einstein grew by nearly the same percentage, these figures suggest that Panera has the superior earning power and is more efficient at using its capital for generating profits. Investors usually look for companies with steadily increasing, high earnings per share, which is why they would likely choose Panera over Einstein. Panera’s ratio is slightly inflated due to its share repurchase; however, the company is fully transparent about this in its annual report, acknowledging the boost to its EPS. 2. Price to Earnings Ratio (P/E Ratio) Panera’s P/E ratios are higher than those of Einstein in both 2012 and 2013 (see Table 1). This suggests that investors are more optimistic about Panera’s future growth than Einstein’s, and that investors are willing to pay more

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