Panera Bread Co. (PNRA), a leading retail bakery-café operating company, has raised its earnings outlook for first quarter fiscal 2010 as well as for the entire fiscal year, based on strong comparable bakery-café sales growth. While the prospects of many of its peers continue to be weighed down by the weak economic environment, the upscale bakery chain reported robust same-store sales for the first quarter.

 

During the first quarter of fiscal 2010, company-owned and franchise-operated comparable bakery-café sales increased 10% and 9%, respectively, on a year-over-year basis. Consequently, Panera Bread has raised its earnings guidance for the quarter to 81−82 cents per share, which represents a 42%−44% year-over-year growth.

 

For fiscal 2010, Panera Bread currently anticipates comparable bakery-café sales year-over-year growth in the range of 6.5% to 7.5%, compared with its earlier projection of 4.5% to 6.5%. In concurrence with the better-than-expected revenue growth estimates, the company has increased its fiscal 2010 earnings guidance from $3.26−$3.34 per share to $3.40−$3.44, which represents a 22%−24% year-over-year growth.

 

The earnings guidance for both the quarter and fiscal 2010 are in line with the Zacks Consensus Estimates. Currently, the Zacks Consensus Estimate for the first quarter of fiscal 2010 is 82 cents while that of fiscal 2010 is $3.42 per share.

 

With respect to earnings surprises, the company has come ahead of earnings expectations over the last four quarters in the range of approximately 2%−7%. The average remained positive at 3.6%, implying that Panera Bread has beaten the Zacks Consensus Estimate by an average of 3.6% in the last four quarters.

 

The company’s positive earnings momentum, owing to its robust comparable sales performance in the first quarter of 2010, has resulted in an upgrade to Zacks # 2 Rank. The Zacks Rank is the short-term recommendation (1−3 months) on the stock. Our long-term recommendation on Panera Bread shares remains Neutral, though the outlook is clearly improving.
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