Panera Bread Co.
) fourth-quarter 2012 earnings of $1.75 per share surpassed the
Zacks Consensus Estimate by 0.6% and the year-ago-quarter
earnings by 23.0%. The better-than-expected results were driven
by solid top-line growth and superior operating margins.
Quarter in Detail
The restaurant chain's total revenue escalated 15% year over year
to $571.5 million in the fourth quarter, which fell shy of the
Zacks Consensus Estimate of $575.0 million.
System-wide comparable net bakery-cafe sales in the quarter
increased 4.9% driven by a 5.1% increase at company-owned units
and a 4.7% rise at franchised-operated units.
The increase at the company-owned comparable net bakery-cafe was
driven by an average check growth of 5.4%. A pricing action of
approximately 2.5% and a positive mix impact of approximately
2.9% drove average check growth in the quarter. However,
transaction growth fell a slight 0.3% in the quarter due to
The company's operating margin enhanced 100 basis points backed
by better bakery-cafe margins.
In full-year 2012, earnings per share grew 27% year over year to
$5.89, which beat the Zacks Consensus Estimate by a penny. Higher
revenues facilitated earnings growth in 2012.
Total revenues witnessed an increase of 17% to $2.1 billion,
which was in line with the Zacks Consensus Estimate. A 6.5%
improvement in system-wide comparable store sales contributed to
the year-over-year increase.
During the quarter, Panera opened 18 new company-owned
bakery-cafes and 14 franchised bakery-cafes. As of Dec 25, 2012,
the company operated 1,652 bakery cafes, of which 809 were
company owned and the rest were franchised. In 2012, the company
opened 123 new units, 59 of which were company-operated.
For 2013, the company expects to unveil approximately 115-125
system-wide units (previously targeted range was 115-120).
In the fourth quarter, Panera bought back 124,100 shares at an
average share price of $161.00, leaving $580 million available
under its existing $600 million repurchase authorization.
However, the activity had minimal impact on earnings per share in
Panera expects earnings to be in the range of $1.62-$1.66 per
share for the first quarter of 2013, reflecting 16%-19% growth.
The company anticipates first quarter company-owned comparable
sales in the range of 4%-5%. Panera is targeting operating margin
improvement of 25 to 75 basis points.
For full-year 2013, Panera continues to expect earnings per share
to grow in the range 17-19% year over year. Management reiterated
its 2013 EPS growth expectation despite higher-than-anticipated
earnings recorded in 2012.
Management also reaffirmed its aim to achieve company-owned
comparable net bakery-cafe sales growth in the range of 4.5%-5.5%
for fiscal 2013. The company expects flat- to 50 basis points
increase in operating margin for fiscal 2013.
Panera already announced that comps at company-owned units in the
first 41 days of the first quarter fiscal 2013 were up
approximately 3.9%, considerably down from 8.9% growth witnessed
in the comparable period of last year.
Panera's long-term earnings growth remains in the range of 15 to
We remain optimistic on the stock based on Panera's ability to
deliver more than 20% growth in earnings per share for five years
in a row, upbeat 2013 outlook and continued margin improvement
amid a sluggish business environment. The company's dominant
position in the bakery-cafe business and more stable traffic than
most of its restaurant peers also inspire optimism around the
However, stiff competition and overall tepid macroeconomic
outlook, which might affect footfall at the restaurants, are
expected to remain headwinds. The decelerating momentum of comps
growth for the first 41 days of first quarter fiscal 2013 is
indicative of lower discretionary spending by consumers. Hence,
Panera currently holds a Zacks Rank #3 (Hold).
Other restaurant companies that are currently performing well and
warrant a look include
Krispy Kreme Doughnuts Inc.
AFC Enterprises Inc.
The Cheesecake Factory Inc.
), all carrying a Zacks Rank #2 (Buy).
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