Panera Bread Co. (PNRA) maintains pricing and earnings targets despite headwinds in the restaurant industry such as health care and minimum wage changes or increases in the price of raw materials, says Nick Setyan, Senior Equity Analyst at Wedbush Securities.
“To start with Panera Bread, I think that the visibility into their same-store sales growth over the not just 2013, but 2014 as well, is within my coverage universe. At the same time, they’re probably the best positioned to benefit from price increases or to take price, and they’re best positioned to have the least inflation on both the commodity-inflation side and on the labor-inflation side,” Setyan said.
Setyan says the management team at PNRA has a track record of executing its strategy successfully in periods where there are pressures in the industry at large, and he expects the leadership at the fast casual restaurant to continue in this path.
“Near term, my checks continue to point to momentum in comp trends, and they consistently have a management team that executes toward their earnings targets, even in any kind of a topline headwind environment. Even when their top line comes in a little bit less than expectations, they tend to meet or exceed their EPS expectations, and in a more defensive environment that’s probably the one thing I would look to the most,” Setyan said.
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