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February 23, 2010
05:55 EDTPFCB, PFCBHigh-flyer P.F. Chang could fall along with earnings growth, says
P.F. Chang's China Bistro (PFCB) shares have jumped nearly 150% in less than a year, and bounced to a 52-week high last week of just under $43. The company's price-to-earnings multiple is 22x 2010 earnings, the valuation investors associate with the kind of high-growth company P.F. Chang's "used to be", says Its five-year earnings-growth rate has slowed to about 5% a year, according to statistics, versus its 10-year annualized earnings-growth rate of 14%. Keith Siegner, restaurant analyst at Credit Suisse says, P.F. Chang's initiation of a dividend says, "That this company now reflects fundamentals more often seen in a more-mature company.'' When the company posted its Q4 report this month, it guided to flat revenue expectations for 2010 versus last year. That continues a trend that's been in place for four years. There are also the real-estate realities to consider. With 197 locations under the brand banner of its flagship China Bistro, the commercial real-estate possibilities are flagging, analysts say. New outlets also risk cannibalizing sales at existing locations. Bottom line: With declining sales and earnings growth, rosy scenarios of a recovery in consumer sales are likely a thing of the past, says Reference Link
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