PNRA SHORT THESIS PLAYING OUT AS EXPECTED

PNRA reported 1Q EPS $1.64 vs. consensus of $1.65 and SSS of 3.3% which missed the 4.3% consensus expectations.  The company pulled the weather card, citing an impact of -1.0% to -1.5% impact from traffic.  The quality of the earning was low in the quarter as EPS benefited $0.05 from resolution of tax matters.  The company left the full year guidance unchanged at +17-19% growth or $6.89-$7.01 (including an extra week).

 

During 1Q13, traffic was -2.4% vs. expectations of -0.9%, which was a sequential decline of -240 basis points from 4Q12.  Even adding back the weather impact of 1.5%, traffic declined 90 basis points sequentially. 

 

The bulls will likely highlight that the March and April comparable sales growth numbers seem back on track, with March running at +4.7% and the first 27 days of April seeing comparable sales growth at +5% at company locations.  Assuming +5.5% in traffic and mix this still suggests negative traffic and we expect traffic to remain pressured for the balance of the year.  Considering the national cable marketing effort that kicked off in February, as part of the higher advertising spending plan for 2013, this is a red flag.

 

Our short thesis remains intact and we expect consensus estimates to be revised down over the coming weeks.  Management maintaining FY13 guidance has heightened the risk that 2H13 earnings miss expectations.

 

The company is hosting its EPS conference call at 8:30am ET.  We’ll post on anything incremental after the call.

 

 

Howard Penney

Managing Director

 

Rory Green

Senior Analyst


Cartoon of the Day: Hard-Headed Bears

How's this for "hard data"? So far, 107 of 497 S&P 500 companies have reported aggregate sales and earnings growth of 4.4% and 13.2% respectively.

read more

Premium insight

McCullough [Uncensored]: When People Say ‘Everyone is Bullish, That’s Bulls@#t’

“You wonder why the performance of the hedge fund indices is so horrendous,” says Hedgeye CEO Keith McCullough, “they’re all doing the same thing, after the market moves. You shouldn’t be paid for that.”

read more

SECTOR SPOTLIGHT Replay | Healthcare Analyst Tom Tobin Today at 2:30PM ET

Tune in to this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

In the latest example of what not to do with your portfolio, we have Wall Street consensus positioning...

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more