The earnings outlook for Panera Bread Company (PNRA) remains strong ahead of its quarterly results next month. While the prospects of many of its peers continue to be weighed down by the weak economic environment, the upscale bakery chain last week reported robust same-store sales for the fourth quarter.

Panera shares have been strong performers since its pre-release in an otherwise weak market. The company is scheduled to report fourth-quarter results on February 11.

During the fiscal 2009 fourth quarter, the company-owned comparable bakery-cafe sales increased 7.4% on a calendar basis, and 5.9% on a fiscal basis. Comparable bakery-cafe sales (calendar basis) increased in every fiscal month of the quarter (6.8% in Oct, 6.1% in Nov and 9.6% in Dec). Furthermore, Panera also reported that comparable bakery-cafe sales were up 9.4% in the first 21 days of Jan 2010.

In concurrence with the comparable bakery-cafe sales growth, Panera increased its fourth quarter 2009 earnings guidance to a range of $0.94 – $0.95 per share. The current Zacks Consensus Estimate for the quarter is $0.94. The full-year 2009 Zacks Consensus of $2.79 is a roughly 24% year-over-year increase.

Estimates are clearly going up, with 11 of the 18 analysts covering the stock raising their 2010 EPS estimates in the last seven days. The current Zacks Consensus Estimate for 2010 of $3.29 per share is up 10 cents in the last seven days. The full-year 2010 estimate represents an 18.3% increase over the 2009 level, reflecting the company’s strong earnings profile.

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 3.2%; meaning that Panera has beaten the Zacks Consensus Estimate by an average of 3.2% in the last four quarters.

The company’s positive earnings momentum, owing to its robust comparable sales performance in the fourth quarter of 2009, 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 shares remains Neutral, though the outlook is clearly improving.

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