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Analyst Blog

On Mar 20, 2014, we issued an updated research report on Panera Bread Company (PNRA - Analyst Report).
    
On Feb 18, this leading food chain posted dismal fourth quarter 2013 results with earnings and revenue missing the Zacks Consensus Estimate. We believe that the miss was due to severe winter weather. However, the company showed an improvement on a year-over-year basis. Earnings were up 4.6% year over year on higher revenues. Revenues were up 16.0% year over year driven by improvements in all its segments.

The company also witnessed muted comps at both company-owned and franchised-operated units due to transaction decline.

Panera expects first quarter 2014 results to be hurt by higher operating expenses and inclement weather, which affects customer visits. Earnings are expected to decline on a year over year basis in the quarter. The company also expects margins to decline in 2014 on higher labor expenses and expenses associated with significant investments in the company's bakery-cafes.

Owing to the weak performance in the fourth quarter and a cautious outlook for the upcoming quarter, estimates for full year 2014 and 2015 have largely moved downwards over the last 30 days.

However, the company is taking initiatives to improve sales. It has introduced new menu items, increased its media exposure and is focusing on an off-premise catering program. Going forward, these initiatives are expected to drive transaction growth.

The company presently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the retail sector include Ignite Restaurant Group, Inc. (IRG - Snapshot Report), The Wendy's Company (WEN - Analyst Report) and Brinker International, Inc. (EAT - Analyst Report). While Ignite Restaurant and The Wendy's sport a Zacks Rank #1 (Strong Buy), Brinker International holds a Zacks Rank #2 (Buy).

 

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