Will Panera Bread (PNRA) Disappoint this Earnings Season? - Analyst Blog

Operator of chain of bakery cafes in US and Canada, Panera Bread Company PNRA is set to report first quarter 2014 results on Apr 29, 2014. In the last quarter, it delivered a negative earnings surprise of 6.15%. Let's see how things are shaping up for this announcement.

Factors to Consider

Panera Bread missed on the top and bottom lines during its fourth quarter results owing to inclement weather. The company expects weather to hurt first quarter results as well. In fact, comparable net bakery-cafe sales in the first 48 days of the first quarter 2014 were down approximately 2.2% compared to the same period in the year-ago quarter as a result of harsh winter that hurt customer visits. Recently, the company re-iterated its first quarter 2014 earnings per share guidance in the range of $1.49 to $1.55, which reflects a decline from the year-ago quarter's level.

In addition, Panera Bread plans to invest heavily in its operational capabilities. Also, it aims to make additional unit openings, which will lead to pre-opening expenses. Though these investments would aid transaction growth over the long-term, it would negatively impact margins in the near term.

However, we cannot ignore the company's aggressive initiatives to boost sales that would mitigate these negatives to some extent. Panera Bread remains better positioned in comparison to other retail cafes and restaurants on the back of introduction of new menu items, increased media exposure and focus on an off-premise catering program. The company is confident that these initiatives will contribute to its future growth.

Earnings Whispers?

Our proven model does not conclusively show that Panera Bread is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: Panera Bread's Earnings ESP is 0.00%.

Zacks Rank: Panera Bread's Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult. We caution against stocks with Zacks Rank #4 and #5 (Sell rated stocks) going into the earnings announcement.

Other Stocks to Consider

Here are some companies in the restaurant and broader retail wholesale sector that you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Tim Hortons Inc. THI, with Earnings ESP of + 1.61% and a Zacks Rank #2 (Buy).

Texas Roadhouse, Inc. TXRH with Earnings ESP of + 2.63% and a Zacks Rank #3.

Vitamin Shoppe, Inc. VSI, with Earnings ESP of + 1.47% and a Zacks Rank #3.