Panera Earnings Look Primed to Rise Higher

Panera Earnings Look Primed to Rise Higher

Panera Bread will release its quarterly report tomorrow, and investors are hoping that the company will be able to produce the same growth that its rapidly rising stock price has promised. As with most high-growth stocks, Panera earnings will need to accelerate to make shareholders truly happy.

Panera has been one of the best growth stories in the restaurant sector, with the company having capitalized on greater demand for healthy food offerings by producing a welcoming café atmosphere. Yet will the bakery chain be able to keep growing at its breakneck pace for the foreseeable future? Let's take an early look at what's been happening with Panera Bread over the past quarter and what we're likely to see in its quarterly report.

Stats on Panera Bread

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$596.02 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will Panera earnings keep rising like yeasty bread dough?
Analysts have tightened up their estimates on Panera earnings only by the smallest of margins, pulling back on their June-quarter estimates by a penny per share and reducing their full-year 2013 calls by twice that. Yet the stock hasn't responded badly to those moves, with shares up between 2% and 3% since mid-April.

Panera's success has come largely from the willingness of consumers to pay up for high-quality food. Chipotle Mexican Grill'srecent results from last week gave further evidence of this, as Chipotle bounced back from a somewhat weak first quarter to post 5.5% comparable-store sales that produced overall revenue gains of more than 18%. Given that Panera's first-quarter results were stronger than Chipotle's, investors hope that Panera can raise the bar even higher this time around.

Co-CEOs Ronald Shaich and Bill Moreton have been an important part of what's gotten Panera to where it is today. Partnerships with high-quality food and beverage suppliers have helped Panera deliver more of what customers are looking for. Moreover, even though the company hasn't been the first-mover in many of its moves -- it chose the same supplier that McDonald's uses for its gourmet coffee, and Starbucks first started emphasizing natural and organic food offerings -- Panera has been smart about taking those themes and applying them more specifically to its own business.

Moreover, Panera's overall strategy has been working. In a recent consumer survey, Chipotle managed to come in ahead of Panera in terms of willingness to pay extra money for healthier food by a 31% to 19% margin. But Panera beat out Starbucks, and with new pasta, salad, and wrap offerings, Panera looks poised to try to capture a larger share of the healthy-eating market.

In the Panera earnings report, watch to see if the same trends that helped Chipotle also show up in Panera's numbers. As the economy continues to recover, Panera has a chance to accelerate its growth by catering to the demand for quality at a reasonable price.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends and owns shares of Chipotle Mexican Grill, McDonald's, Panera Bread, and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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