Einstein Noah surges after 1Q profit more than triples
NEW YORK—Shares of Einstein Noah Restaurant Group Inc. jumped Thursday after the bagel chain operator reported its first-quarter profit more than tripled on increased same-store sales.
Late Wednesday the company said earnings for the period ended April 1 surged to $3.8 million, or 23 cents per share, compared with $1.1 million, or 10 cents per share, a year earlier.
Quarterly revenue grew 7 percent to $103.3 million from $96.3 million in the prior year.
Analysts surveyed by Thomson Financial predicted net income of 16 cents per share on sales of $101.8 million. Estimates typically exclude one-time items.
Company-owned restaurant sales improved to $93.6 million from $89.1 million, while manufacturing and commissary revenue climbed to $8.1 million from $5.8 million.
Same-store sales at company-owned restaurants grew 3.6 percent during the quarter.
Same-store sales, or sales at stores open at least a year, is a key indicator of retailer performance because it measures growth at existing stores rather than newly opened ones.
Einstein Noah also credited its performance to locked-in wheat costs, a price increase and revamped menu.
Nicole Miller Regan of Piper Jaffray upgraded the company to "Buy" from "Neutral," saying she was pleased with the company's locked-in wheat costs.
"Given that wheat prices have increased approximately 100 percent year to date on a year-over-year basis, we credit management for contracting 100 percent of its 2008 wheat needs as well as a portion of its 2009 first-quarter needs," she wrote in a client note.
While Einstein's same-store sales results came in below Oppenheimer & Co. Matthew DiFrisco's 5.1 percent estimate, the analyst still liked the performance.
"Given that roughly 20 percent of company-owned stores are in California, 13 percent are in Florida and 6 percent are in Arizona, we view the first-quarter same-store sales as strong," he said.
DiFrisco raised his price target to $16 from $14 and kept an "Outperform" rating.
Shares of Lakewood Colo.-based Einstein Noah Restaurant Group added $1.88, or 17.1 percent, to $12.88 in afternoon trading. Over the past 52 weeks, the stock has traded in a range of $8.35 to $24.90.
