Panera Bread (PNRA) posted better-than-expected 2Q16 results on July 27, 2016. As a result, the company’s management raised its EPS (earnings per share) guidance for fiscal 2016. The guidance increased investors’ confidence and raised Panera Bread’s share price to $221.6 on July 28, 2016.
However, the widening gap between the cost of eating at home compared to the cost of dining out and softening growth in restaurants due to a slowdown in the US economy made investors skeptical about investing in Panera Bread. As a result, Panera Bread’s share price fell. As of September 19, 2016, Panera was trading at $201.1—down 9.3% from July 28, 2016.
YTD (year-to-date), Panera has returned 5.3%. While the share price of its peers such as Chipotle Mexican Grill (CMG) and Shake Shack (SHAK) have fallen 10.3% and 9.7% respectively. During the same period, the Consumer Discretionary Select Sector SPDR Fund (XLY) has returned 2.1%. XLY has invested more than 10% of its holding in restaurant companies such as McDonald’s (MCD), Starbucks (SBUX), and Yum! Brands (YUM).
In this series, we’ll look at changes in analysts’ estimates for Panera’s revenue, earnings before interest and tax margin, and EPS for the next four quarters. Finally, we’ll look at Panera’s valuation multiple and analysts’ recent recommendations and target prices for the next 12 months.
Let’s start by looking at analysts’ revenue estimates for the next four quarters.