Panera Bread Reaffirms Financial Outlook - Analyst Blog

Panera Bread Company PNRA recently held its investor day in Charlotte, N.C. and announced that it has re-affirmed its financial outlook for the first quarter and full year 2014, provided during the fourth quarter earnings call last month.

The company reiterated its first quarter earnings guidance in the range of $1.49 to $1.55, down year over year, as Panera expects the business environment to remain sluggish in 2014. The guidance reflects the impact of inclement weather that hurt customer visits. The current Zacks Consensus Estimate of $1.52 falls within the guidance range.

The company continues to expect full year earnings in the range of $6.80 to $7.05. The Zacks Consensus Estimate of $6.94 lies within the company guided range. The guidance takes into account the investments planned for 2014 in order to expand growth opportunities, which might hurt margins as well as the bottom-line in 2014 and 2015. However, these initiatives will aid in achieving transaction growth in 2014, which declined throughout 2013.

Panera Bread continues to expect company-owned comparable net bakery-cafe sales growth in the range of 2.0% to 4.0% for 2014.

On Feb 19, the company posted dismal results with earnings and revenue missing the Zacks Consensus Estimate. We believe that sluggish comps as a result of inclement weather led to the miss. Estimates for this Zacks Rank #4 (Sell) company largely moved downwards due to the weak performance and a cautious outlook.

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. We believe that these initiatives would contribute to the company's future growth. Going forward, Panera also expects to survive in this digital technology environment with the help of its strategic initiatives.

Some better ranked stocks worth considering in the restaurant industry include Ignite Restaurant Group, Inc. IRG, Famous Dave's of America Inc. DAVE and The Wendy's Company WEN. All these stocks carry a Zacks Rank #1 (Strong Buy).