Mover: Panera's shares rise after strong 3Q report
NEW YORK -- Shares of Panera Bread Co. rose Wednesday, after the restaurant operator reported that its third-quarter profit jumped 27 percent, on strong demand for its soups and sandwiches, and the company raised its fourth-quarter and full-year earnings outlook.
THE SPARK: St. Louis-based Panera reported results that topped analyst estimates.
Late Tuesday, the company said its net income rose to $36.5 million, or $1.24 per share, in the three months ended Sept. 25. Revenue rose 17 percent to $529.3 million.
Analysts expected $1.19 per share profit, on revenue of $522.3 million, according to FactSet.
Revenue at restaurants open at least a year, a key measure of a restaurant chain's financial health, rose 6.2 percent at company-owned locations and 5.5 at franchised locations.
THE BIG PICTURE: Panera and other fast-casual chains like Chipotle have been gaining in popularity in the U.S. and are seen as a step up from traditional fast-food chains.
The strong results led Panera to raise its outlook for the current quarter and the full year.
For the fourth quarter, Panera now expects earnings of $1.72 to $1.74 per share, up from $1.66 to $1.70 per share. Analysts were expecting $1.69 per share. For 2012, the company now expects net income of $5.86 to $5.88, up from $5.72 to $5.78. Analysts were forecasting $5.78 per share.
THE ANALYSIS: Lynne Collier, an analyst at Sterne Agee, called the quarter's sales "impressive." She noted that profit margins improved, primarily because the chain was able to leverage its sales and benefit from slightly lower expenses. And she pointed to better-than-expected gains in sales at restaurants open at least a year. She kept a "Neutral" rating on the stock.
Paul Westra of Cowen and Co. also kept a "Neutral" rating, but raised his fourth quarter estimate by 5 cents to $1.73.
SHARE ACTION: Panera's shares rose 6.8 percent, or $10.86 to $171.20 in midday trading.