Must-know overview: Panera Bread Company’s 2Q14 earnings

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Company overview

Panera Bread Company (PNRA) operates bakery-café concept restaurants under the brand name Panera Bread and Paradise Bakery & Cafe across the U.S. and Canada. It sells freshly baked bread, pasta, panini and sandwiches, flatbread, and drinks under the Panera Bread brand. Under the Paradise Bakery brand, it sells similar offerings, including breakfast sandwiches, salads, and soups.

Panera Bread Company operated over 1,800 restaurants under a combination of company-owned and franchised business models. Click here to learn more about different business models in the restaurant industry.

Earnings per share

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Panera Bread Company’s second quarter earnings were released on July 29, 2014. The company reported diluted earnings per share before abnormal items (or EPS) of $1.74. This number was flat compared to the same quarter last year. The abnormal item includes a one-time benefit of $0.08 from an insurance coverage resolution that resulted in an EPS of $1.82.

The company’s total operating income, however, declined by 11% to $73.9 million from $83.4 million in the corresponding quarter last year. Operating profit margins also declined to 11.7% from 14.2% as a percentage of sales in the corresponding period last year. We’ll discuss the financial performance in more detail later in this series.

Competition

In the U.S., Panera Breads competes with chains like Chipotle Mexican Grill (CMG), which saw earnings growth of 29% year-over-year (or YoY), Potbelly Corporation (PBPB), which reported a revenue growth of 7% YoY, and Fiesta Restaurant Group, Inc.(FRGI), which reported a revenue growth of 9% YoY.

If you’re looking to invest in a diversified restaurant portfolio, you may consider the exchange-traded fund (or ETF) the Consumer Discretionary Select Sector SPDR Fund (XLY).

Topics discussed in this quarterly overview

In this quarterly overview series for Panera Bread Company, we’ll take a deeper look at the earnings and strategic changes or tactics that management discussed during the earnings call. We’ll also discuss key value metrics like same-store sales, the impacts of costs, how the market reacted to the earnings, and Panera Bread Company year-to-date (or YTD) stock performance. This will help you understand the company and make an investment decision.

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