Can Panera Capitalize on Chipotle's Downfall and Report Strong Earnings?

Panera Bread Co. (PNRA) Consumer Discretionary - Hotels, Restaurants & Leisure | Reports February 9, After Market Closes

Key Takeaways

• The Estimize consensus is calling for EPS of $1.79 and revenue of $697.30, slightly higher than Wall Street's estimates
• Panera is hoping to capitalize on Chipotle's free fall with new a more aggressive corporate strategy
• One of the biggest problem that Panera faces is that the restaurant industry has become extremely competitive
• What are you expecting for PNRA? Get your estimate in here!

Fast casual chain, Panera is scheduled report fourth quarter earnings February 9, after the market closes. Panera has long been a fan favorite amongst customers for its devotion to high quality ingredients and customer service. Shareholders are hoping, Panera has capitalized on Chipotle's meteoric fall when the company reports Q4 earnings. This quarter, the Estimize consensus is calling for EPS of $1.79 and revenue of $697.30 million, slightly higher than Wall Street's estimates. Compared to Q4 2014, this represents a projected YoY decline in EPS of 3% and increase in revenue of 4%. The past two quarters the company has come with mixed results as revenue climbed while EPS declined. Consistent with this trend, the Estimize community has revised EPS down 7% in the past 3 months. Panera is rolling out new menus and promotional strategies in order to differentiate itself in a heavily concentrated fast casual market.

One problem that Panera faces is that the fast casual industry has become extremely competitive. Many new restaurants have emerged in the industry, differentiating themselves while also riding the coattails of trailblazers like Panera. That said, Panera is one of the few established fast casual chains expanding over the past few years. The bread maker is diligently rolling out new menu innovations, promotional strategies and upgrading digital initiatives which have started to yield positive results. Panera's newest initiative, Panera 2.0, has cut down wait times, increased efficiency and has proven to draw more customers to its stores. Furthermore, Panera has focused on using fresh ingredients and antibiotic free meat which has been popular among health conscious consumers. On the downside, Chipotle took a similar stance on its ingredients and we know how that turned. Additionally rising food costs along with increased wages is offsetting the positive impact on the company's strategic efforts. In the near term, these huge investments and costs have hurt margins, evidenced by two consecutive quarters of contracting EPS.

Do you think PNRA can beat estimates? There is still time to get your estimate in here!

Photo Credit:Mike Mozart