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Bear of the Day: Panera Bread (PNRA) - Bear of the Day

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There is arguably a boom happening in the restaurant sector right now. Companies are seemingly going public on a monthly basis in the space, with firms like Shake Shack ( SHAK ), El Pollo Loco ( LOCO ), and Zoe's Kitchen ( ZOES ) highlighting the recent wave.

We have also seen strong sales or earnings growth for many companies in this sector, leading to big gains to start 2015. In fact, the Zacks Industry Rank for the retail-restaurant segment is currently just outside the top 15%, suggesting that this is a very promising area for the market.

However, while most stocks in this corner of the investing world have done well, a few haven't ridden the wave to gains. One such company that has been having trouble despite the positive environment is undoubtedly Panera Bread ( PNRA ).

PNRA in Focus

Panera is a St. Louis-based (originally known as the 'St. Louis Bread Company') firm that owns and operates bakery-cafes across the U.S. and Canada. PNRA is closing in on 2,000 stores and it has grown quickly since its humble beginnings less than 35 years ago.

The most recent news for Panera, however, has not been great as the stock has lost about 10% since the start of 2015. While PNRA beat earnings estimates, the stock slumped on revenue worries and concerns over the full year. PNRA management warned that EPS for 2015 could decline as the company works to speed up customer service, putting many investors on edge for the time being.

PNRA Estimates

The concerns have also hit analyst expectations as estimates have been nearly universally cut in recent days. Not a single estimate has moved higher for either the current quarter or current year in the past sixty days, reflecting the universal agreement among analysts on PNRA's prospects.

The consensus estimate has also taken a hit thanks to these revisions, as PNRA is now expected to see EPS decline by 7.05% this quarter, and 4.3% for the full year. And for the full year, estimates just 30 days ago were baking in an EPS increase, showing just how much analyst opinion has turned on PNRA lately.

Bottom Line & Other Picks

For these reasons, it shouldn't be a surprise to note that PNRA has earned itself a Zacks Rank #5 (Strong Sell). We only assign this low rank to about 5% of companies that we cover, so you know that PNRA is looking especially weak right now.

Fortunately, you can pretty much pick a restaurant at random and it will be better positioned than PNRA right now, as PNRA is one of just two companies with a #5 rank (along with CAKE ), so there are a number of other options out there for investors to choose from.

One in particular that might be an interesting pick is JACK . This company just reported solid earnings and it has been seeing a ton of positive earnings estimate revisions lately. So if you are looking for a better way to play the restaurant space than the struggling Panera, pretty much take your pick, though JACK is certainly an excellent choice right now.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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