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TIME TO SHORT PNRA?

The Hedgeye Restaurants Team, led by Howard Penney, added Panera Bread Company (PNRA) as a short to Hedgeye's Best Ideas List on Friday, April 5th. We will be hosting a brief conference call on Wednesday, April 10th at 1:00pm entitled, "Competition Heats Up. Is it Time to Short PNRA?" to outline the key issues facing PNRA.

 

TIME TO SHORT PNRA? - PNRAdial 04.10

 

 

CALL OBJECTIVE

 

Gain an understanding of what has changed in the restaurant industry as well as for PNRA specifically that makes PNRA an attractive short case.  

 

 

CALL OVERVIEW  

 

PNRA's position as a healthy QSR option that is relatively free of competitors is gradually changing. An increased number of casual dining chains are now offering lower price points and other QSR chains are upgrading their menus to include items that are cheaper than PNRA's core offerings but are marketed competitively as healthy eating options. 

 

As a consequence:

 

This secular trend is manifesting itself in the components of comparable sales growth as PNRA traffic trends have shown recent weakness

 

We believe that the Street is overly optimistic about a recovery in SSS for 2H113

 

With limited upside to EPS the case for a multiple expansion seems unlikely from current levels

 

 

CALL DETAILS

  • Toll Free Number:
  • Direct Dial Number:
  • Conference Code: 997891#
  • Materials: CLICK HERE

Howard Penney

Managing Director

 

Rory Green

Senior Analyst


Japanese Stocks On The Move

When the Bank of Japan announced its $1.4 trillion stimulus to help boost the economy last Thursday, two things happened: the value of the Japanese Yen plummeted and the Nikkei 225 Index - Japan's version of the Dow Jones Industrial Average - shot up and continues to post massive gains. The Nikkei is up +9.9% over the last five trading days alone and is up +27% year-to-date. That's what happens when a country's central bank starts messing around with the markets, folks.

 

Japanese Stocks On The Move - nikkei225


MACAU: A PREVIEW OF THE PREVIEW

Recently updated Q1 Macau EBITDA and hold adjusted EBITDA projections – MPEL looks great

 

 

Q1 earnings season should be decent for the Macau operators although there are only 2 real standouts – both were impacted by low hold.  On a hold adjusted basis, which is what we care about, MPEL and MGM Macau performed very well in Q1.  Wynn Macau is the only property that looks like it could post a slight miss relative to consensus but that would be on a hold adjusted basis as our projection for actual EBITDA exceeds consensus slightly.

 

MPEL remains our favorite name in the space with the catalyst of a terrific Q1 earnings release looming.  More importantly, the stock remains incredibly inexpensive relative to most Macau names and could be ripe for a 2-3 multiple turn increase in its EV/EBITDA valuation.  As we wrote about in our note “INVESTABLE MPEL” on 03/21/13, MPEL should transition from a trading vehicle to a core long-term holding for many long only investors which should help inflate the multiple to something more realistic:  11-12x (post-opening of MSC).   

 

MACAU: A PREVIEW OF THE PREVIEW - hold3


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FIRST WEEK OF APRIL IN MACAU

ADTR up 10% YoY - too early to make any calls

 

 

Daily table revenues (ADTR) averaged HK$847 million during the first 7 days of April, up 10% YoY.  Our full month projection is for GGR of HK$26.5-27.5 billion which would represent YoY growth of 9-13%.  MPEL and LVS are off to great starts.  Still too early in the month to make any real conclusions about trends or market shares.  

 

FIRST WEEK OF APRIL IN MACAU - mmm1

 

FIRST WEEK OF APRIL IN MACAU - mmm2


News From Our Sector Heads

Todd Jordan (GLL):

 

Ambrose So fears H7N9 may affect gaming (via Macau Business)

 

Jay Van Sciver (Industrials):

 

Alcoa 1st Quarter Earnings Conference (via Alcoa)

 

Kevin Kaiser (Energy):

 

Killing Keystone Seen as Risking More Oil Spills by Rail (via Bloomberg)

 

Josh Steiner (Financials):

 

EU antitrust regulators to investigate MasterCard card fees (via Reuters)

 

Citi files Nasdaq claim over Facebook IPO (via Financial Times)

 

Howard Penney (Retaurants):

 

Caribou Coffee Closings: Chain Reveals Massive Nationwide Shutterings, Chicago Area Hit Hard (via HuffPo)

 

Brian McGough (Retail):

 

Ron Johnson Ousted As JCPenney CEO (via Forbes)





PODCAST: The Three Points

 

On today’s Morning Investment Call held for Hedgeye subscribers, CEO Keith McCullough discussed an amalgamation of market catalysts ranging from the risk range of the S&P 500 to what lies next for the yield on the 10-Year Treasury. Keith is still a big buyer of US stocks and the US dollar and a seller of commodities. Remember: get the US dollar right and you get a lot of other things right. His three big points this morning focus on Chinese deflation, the 10-year and recent moves in crude oil. When Brent moves to the downside, it should get your attention



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