Panera Bread has earnings per share of $1.38 and a P/E and P/S ratio of 25 and 19, respectively.

Assume that the average P/E and the P/S of comparable fast food restaurant stocks is 27.5 and

16.5, respectively.

Required:

i

Discuss.

Estimate a value for Panera Bread's stock using the industry price to earnings as a valuation multiple. According to the

market, is Panera over or underpriced?

What are the assumptions underlying this estimate?

Assume that analysts are expecting Panera to grow at about 50 percent over the

next year. Compute the PEG ratio for

Panera. Is Panera over or underpriced?

Discuss.