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Panera Bread Company reported mixed first-quarter 2017 results wherein earnings fell short of the Zacks Consensus Estimate but revenues surpassed the same.
Earnings and Revenues Discussion
Panera’s first-quarter adjusted earnings per share of $1.83 failed to beat the Zacks Consensus Estimate of $1.84 by 0.5%. However, earnings per share increased 17.3% year over year, mainly on the back of higher revenues and a lower share count.
Revenues of $727.6 million increased 6.2% year over year owing to higher bakery-café sales, fresh dough and other product sales to franchisees as well as increased franchise royalties and fees. Moreover, revenues topped the consensus mark of $718 million by over 1%.
Comps Discussion
System-wide comparable net bakery-café sales increased 2.6%, more than 0.7% growth recorded in the last quarter. Meanwhile, comps at company-owned units grew 5.3%, higher than a 3% rise in the fourth quarter. Notably, comps at company-owned units reflect year-over-year retail price increase of 2% along with 3.5% year-over-year growth in entrees served. However, negative mix had a 0.2% impact on comps
Panera witnessed 0.3% rise in comps at franchisee-operated units, which compared favorably with the 1.4% decline in the previous quarter.
Margins
Panera’s adjusted operating margin (excluding amounts reserved for certain legal matters) inched up 30 basis points (bps) from the year-ago quarter. This was primarily because of lower food cost, somewhat offset by structural wage increases and added labor hours for the company’s delivery initiative.
Panera Bread Company Price, Consensus and EPS Surprise
Panera recently announced that it has inked a definitive merger agreement with JAB Holdings Company. Per the agreement, JAB Holdings will acquire Panera for $315 per share in cash, in a transaction valued at roughly $7.5 billion, including $340 million of net debt. Notably, the deal is slated to close in the third quarter of 2017, subject to shareholder and regulatory approvals.
In fact, among other things the food conglomerate’s portfolio of brands also made it well-suited to dig into Panera. Meanwhile, the acquisition could provide the bakery café chain with easier expansion opportunities in Europe and beyond.
Full-Year 2017 Guidance
Given the acquisition deal with JAB Holdings, the company has refrained from updating its outlook for full-year 2017.
However, it is to be noted that per its earlier provided guidance, the company anticipated 2017 adjusted EPS to be in the band of $7.45 to $7.70, up 11% to 14% year over year.
Company-owned comparable net bakery-cafe sales growth was expected in the range of 3.5% to 4.5%.
Operating margin was projected to be flat to up 50 bps compared to 2016-levels.
Meanwhile, the company estimated system-wide bakery-cafe openings in the range of 70 to 80 in 2017.
Zacks Rank & Stocks to Consider
Panera has a Zacks Rank #3 (Hold). Better-ranked stocks in this sector include Restaurant Brands International Inc. (QSR - Free Report) , Darden Restaurants, Inc. (DRI - Free Report) and Bob Evans Farms, Inc. . While Restaurant Brands sports a Zacks Rank #1 (Strong Buy), Darden and Bob Evans Farms carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Restaurant Brands’ earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average beat of 19.20%. Meanwhile, for 2017, EPS is expected to improve 14.9%.
The Zacks Consensus Estimate for Darden’s fiscal 2017 earnings climbed 1.8%, over the last 60 days. The company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 3.35%.
The Zacks Consensus Estimate for Bob Evans Farms’ fiscal 2017 earnings climbed 1.3%, over the last 60 days. The company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 12.74%.
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Panera (PNRA) Misses Q1 Earnings, Tops Revenue Estimates
Panera Bread Company reported mixed first-quarter 2017 results wherein earnings fell short of the Zacks Consensus Estimate but revenues surpassed the same.
Earnings and Revenues Discussion
Panera’s first-quarter adjusted earnings per share of $1.83 failed to beat the Zacks Consensus Estimate of $1.84 by 0.5%. However, earnings per share increased 17.3% year over year, mainly on the back of higher revenues and a lower share count.
Revenues of $727.6 million increased 6.2% year over year owing to higher bakery-café sales, fresh dough and other product sales to franchisees as well as increased franchise royalties and fees. Moreover, revenues topped the consensus mark of $718 million by over 1%.
Comps Discussion
System-wide comparable net bakery-café sales increased 2.6%, more than 0.7% growth recorded in the last quarter. Meanwhile, comps at company-owned units grew 5.3%, higher than a 3% rise in the fourth quarter. Notably, comps at company-owned units reflect year-over-year retail price increase of 2% along with 3.5% year-over-year growth in entrees served. However, negative mix had a 0.2% impact on comps
Panera witnessed 0.3% rise in comps at franchisee-operated units, which compared favorably with the 1.4% decline in the previous quarter.
Margins
Panera’s adjusted operating margin (excluding amounts reserved for certain legal matters) inched up 30 basis points (bps) from the year-ago quarter. This was primarily because of lower food cost, somewhat offset by structural wage increases and added labor hours for the company’s delivery initiative.
Panera Bread Company Price, Consensus and EPS Surprise
Panera Bread Company Price, Consensus and EPS Surprise | Panera Bread Company Quote
Recent Developments
Panera recently announced that it has inked a definitive merger agreement with JAB Holdings Company. Per the agreement, JAB Holdings will acquire Panera for $315 per share in cash, in a transaction valued at roughly $7.5 billion, including $340 million of net debt. Notably, the deal is slated to close in the third quarter of 2017, subject to shareholder and regulatory approvals.
In fact, among other things the food conglomerate’s portfolio of brands also made it well-suited to dig into Panera. Meanwhile, the acquisition could provide the bakery café chain with easier expansion opportunities in Europe and beyond.
Full-Year 2017 Guidance
Given the acquisition deal with JAB Holdings, the company has refrained from updating its outlook for full-year 2017.
However, it is to be noted that per its earlier provided guidance, the company anticipated 2017 adjusted EPS to be in the band of $7.45 to $7.70, up 11% to 14% year over year.
Company-owned comparable net bakery-cafe sales growth was expected in the range of 3.5% to 4.5%.
Operating margin was projected to be flat to up 50 bps compared to 2016-levels.
Meanwhile, the company estimated system-wide bakery-cafe openings in the range of 70 to 80 in 2017.
Zacks Rank & Stocks to Consider
Panera has a Zacks Rank #3 (Hold). Better-ranked stocks in this sector include Restaurant Brands International Inc. (QSR - Free Report) , Darden Restaurants, Inc. (DRI - Free Report) and Bob Evans Farms, Inc. . While Restaurant Brands sports a Zacks Rank #1 (Strong Buy), Darden and Bob Evans Farms carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Restaurant Brands’ earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average beat of 19.20%. Meanwhile, for 2017, EPS is expected to improve 14.9%.
The Zacks Consensus Estimate for Darden’s fiscal 2017 earnings climbed 1.8%, over the last 60 days. The company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 3.35%.
The Zacks Consensus Estimate for Bob Evans Farms’ fiscal 2017 earnings climbed 1.3%, over the last 60 days. The company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 12.74%.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>