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Panera Needs Its 3Q Earnings to Be in Line with Higher Guidance

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Stock performance

Panera Bread (PNRA), a fast-casual restaurant chain, is set to announce its 3Q16 earnings after the market closes on October 25, 2016. The company specializes in sandwiches, bakery items, salads, and soups.

In 2Q16, Panera posted EPS (earnings per share) of $1.78 on revenues of $698.9 million compared to analysts’ estimate of $1.75 on revenue of $696.7 million. After positive 2Q16 earnings, Panera’s management raised its guidance for fiscal 2016, which increased investor confidence, leading to a rise in its share price.

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However, the widening gap between the cost of eating at home and the cost of dining out, along with softening growth in restaurants due to a slowdown in the US economy, made investors skeptical about investing in Panera Bread. As a result, Panera’s share price fell. As of October 17, 2016, Panera was trading at $191.30, a fall of 7.8% from $207.60 on July 26, 2016, the day it announced its 2Q16 earnings.

Year-to-date performance

Since the beginning of 2016, Panera shares have been flat. During the same period, the share prices for peers Chipotle Mexican Grill (CMG) and Shake Shack (SHAK) fell 12.1% and 17.4%, respectively. The broader comparative index, the iShares Russell Mid-Cap Growth (IWP), has risen 4.0%. IWP has invested 53.4% of its holdings in restaurant and travel companies.

You can also read about Chipotle’s 3Q16 earnings preview at Chipotle’s 3Q16 Results to Show Recovery from E. Coli Outbreak.

Series overview

This pre-earnings series will explore what we can expect from Panera Bread’s 3Q16 earnings release. The series will cover analysts’ estimates for revenue, EBIT (earnings before interest and tax) margins, and earnings per share. To wrap up this series, we’ll look at the company’s valuation multiple and expected stock price over the next 12 months.

First, let’s look at Panera’s 3Q16 revenue estimates.

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