I ended up deciding to stay in ZOES and increased my stake after the Q4 report.
Here how the earnings are shaking out:
Yr Q1 Q2 Q3 Q4
2014 -.06 -.04 .04 -.03
2015 .04 .05 .05 .13
Same store sales increased at 7.7%, which is impressive because many of the restaurants are located in areas particularly hard hit by the oil slump.
Stores grew from 140 to 166 (~19%), and revenue grew about 32%. PE is still 147 using the adjusted earnings so it is pricey. But earnings are increasing fast, and (if my memory serves me right) there is about a 2 year payback on the restaurants so the PE should be at an inflection point down and the earnings could be accelerating (depending on how aggressively the store count is grown).
Healthy/tasty eating choices are VERY limited in most parts of the country so ZOES could have a long runway.
This is probably a decent time to put this on your watch list. The concept is starting to prove out, efficiencies are growing. It wouldn’t surprise me if two more quarters and we will be at a more reasonable PE, and a PEG below 1.