Coverage: Panera rises after earnings beat expectations

Restaurant chain Panera Bread reported Tuesday that its fourth-quarter earnings that topped expectations, sending its stock price higher.

Tony Owusu of TheStreet.com had the news:

The St. Louis-based company reported fourth quarter net income of $2.05 a share, an increase of 6% over the previous year, ahead of Wall Street’s consensus expectation of $2 a share.

Revenue for the period rose 5% to $727.1 million, in-line with analyst expectations for the quarter.

For the year, Panera Bread guided for earnings between $7.45 and $7.70 per share. Analysts are expecting the company to earn $7.67 this year.

Panera was the subject of a couple of bullish investor notes from Canaccord Genuity and Oppenheimer ahead of the release of its fourth quarter results.

Analysts at Oppenheimer upgraded the stock to Outperform while adding the company to its 2017 “top picks” list. The firm also anticipated the restaurant’s soft 2017 EPS expectations, but believes the longer-term picture is bright.

Maggie McGrath of Forbes reports that the Panera 2.0 strategy is paying off:

Nearly three years after announcing a “Panera 2.0” initiative to modernize order, pay and production processes, Panera Bread is finally seeing some early returns on the program — and they’re not half bad. The fast-casual eatery posted better-than-expected fourth quarter earnings results Tuesday thanks in no small part to sales gains derived from improved digital offerings at its company-owned stores.

Panera reported Tuesday that it recorded $727.1 million in fourth quarter revenue, a figure that was in line with the Wall Street consensus and marked a 5% increase on a year-over-year basis. Net income for the quarter came in at $44 million, or $1.92 in earnings per share. Excluding one-time items, Panera posted $2.05 in fourth quarter earnings per share, up 9% year over year and beating the Street’s estimates by 5 cents a share.

Panera’s fourth quarter same store sales results — and the dichotomy between company-owned comparable store sales and franchise-operated comparable store sales — provide a bit of proof for the success of the “2.0” investments: Panera focused its “Panera 2.0” developments (fast lane kiosks, rapid pick up, mobile order) on company-owned restaurants, and those stores posted distinctly higher same-store sales than their franchise-run counterparts. Company-owned comp store sales grew 3% during the quarter, while franchise-operated stores saw comp store sales decline 1.4%.

Digital sales now account for 24% of total sales in company-owned restaurants, Panera said.

Lisa Brown of the St. Louis Post-Dispatch focused on how digital sales helped the company:

The company’s executives cited technology upgrades that expanded its Rapid Pick-Up, delivery and catering capabilities in boosting revenue at company-owned restaurants. Delivery is available in 15 percent of its restaurants and is being expanded to St. Louis in the coming weeks.

“With peak investments and significant scale behind us, we are now focused on completing the rollout of our initiatives and reaping the benefits,” CEO and chairman Ron Shaich said in a statement. “Because of the strength of our initiatives, we are confident our efforts will translate into market share gains and sustainable double-digit earnings growth

Panera had 2,036 restaurants in 46 states and Ontario, Canada, as of Dec. 27. The company plans to open between 70 and 80 new bakery cafes this year, down from 93 in 2016.