Panera Bread (PNRA) Plunges On a Downward Guidance Revision

Panera Bread Company (PNRA), which investors consider a promising, high-growth restaurant stock, reported mixed second quarter earnings that showed slower growth than in the prior year quarter. Panera earned $1.74 per share, or $51 million, up from $1.50 per share in a year ago. Revenue rose 11% to $589 million as same-store sales increased 3.7%. Although Panera's results are very strong for a casual dining restaurant, it lowered its full year earnings and same-store sales guidance.

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Panera lowered its 2013 earnings per share forecast to a range between $6.75 to $6.85, down from a previously guided range between $6.91 to $7.03. Same-store sales are now expected to come in between 3% to 5%, a slight decrease from the 4% to 5% growth it had previously forecast. CFO Roger Matthews commented, "Our same-store sales growth was below our expectations. It is our intention to return to a greater premium on the industry and sustain that premium." Co-CEO and founder Ronald M. Shaich noted that lower same-store sales during breakfast were notably lower than its sales after 2 p.m., which rose 5% year-on-year. Shaich stated that the afternoon and evening gain was primarily attributed to its introduction of pasta items in February, which has proven popular with customers despite higher prices. Shaich also pointed out that much of Panera's marketing has been focused on promoting its afternoon and evening products. In addition, major players in the fast food industry - including McDonald's (MCD), Yum! Brands (YUM), Jack in the Box (JACK) and Burger King (BKW) - have rolled out increasingly creative breakfast items (such as Taco Bell's Waffle Taco) which have saturated the marketplace. To boost demand for Panera's breakfast items, the company is rolling out a new power breakfast sandwich during the third quarter. Panera remains committed to its slogan, "Live Consciously, Eat Deliciously," to emphasize its position as a healthier alternative to other fast food restaurants. It is also focusing on lighter fare, such as half-sandwiches. "Expect to see a number of smaller, lighter, less expensive products added to our menu in 2014," Shaich stated. Panera's loyalty program's numbers rose from 11 million to 14.5 million users in the second quarter. Over half of all purchases are made through its loyalty program, MyPanera. The company intends to use special loyalty programs for breakfast items, in an effort to boost its lagging breakfast sales. Panera is also still growing steadily, adding 18 new company-owned locations and 19 new franchised ones during the quarter, bringing its total store count up to 1,700. Shares of Panera Bread currently trade at 21.5 times forward earnings with a 5-year PEG ratio of 1.4. The stock, signifying reasonable growth ahead, although the stock trades at a premium to its industry competitors. The company does not currently pay a dividend. Other News About PNRA New Panera Bread Features Drive-Thru Can a drive-thru boost Panera's appeal? Fast-Food Rivals Are Eating Panera's Breakfast Panera scrambles to catch up to its fast food rivals with better breakfast Other Stocks in the News Facebook's Fluid Shift to Mobile Leaves Competitors in the Dust Facebook gets' mobile, and investors cheer. What Does the Patent Cliff Mean for This Drugmaker? Does Eli Lilly face a dark future? Copyright 2013 by InvestorGuide.com, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA InvestorGuide.com, Inc.) or its employees responsible.

Published on Aug 1, 2013
By Leo Sun
Leo Sun
Leo Sun is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

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