Megan Trzcinski

November 22, 2013

FIN 333
Event Study: PNRA
On April 23, 2013, Bill Moreton, President and Co-CEO of Panera Bread Company announced that he
would be transitioning to the title of Executive Vice Chairman due to family obligations. According to
Yahoo! Finance and Reuters, Panera published an announcement that its first quarter earnings per share
was inline with analysts estimates for the quarter despite this event.
The actual earnings per share for Panera Bread Company (PNRA) released on the date of the event, April
23, 2013, was $1.64. The mean earnings per share forecast for that quarter was $1.65. There were 21
forecast estimates available for Paneras first quarter.
The company had a beta of -0.12 during its most recent first quarter according to the regression
performed on excel using data gathered from Bloomberg and Yahoo! Finance.
Overall, the announcement had little impact on the companys earnings per share. The actual EPS
differed from the estimated by only $0.01. After the announcement, the company had a slightly higher
abnormal return than average. The transcript revealed that the company was on track to continue
positive yields to stockholders. The transcript cited growth in franchise and company openings of new
cafes as well as the success of the customer loyalty program MyPanera. The company has been
reinvesting in itself, stating we are making significant investments in our operational capabilities.
Citing that their president and co-CEO will remain involved in the company gives stockholders a good
opinion of the company. On the conference call, Moreton said I'm not leaving Panera but rather
lessening my work load a little to allow me to deal with this personal situation.
After repeating the message of Moretons transition, the company acknowledged that they are
pleased, all things considered, with our first-quarter results and believe we're in a strong position to
hit our 2013 targets. The announcement resulted in a negative surprise for the company, though a
small one. The company has matched analysts estimates consistently. Panera has remained fairly
steady in increasing its earnings per share but the announcement did hinder this growth temporarily.
There were 21 analyst estimates for Paneras first quarter in 2013 ranging from $1.61 to $1.66. The
forecasted average was $1.65 with actual earnings per share of $1.64. There was a tSurprise of 0.37 and
$Surprise of -$0.01.
In the Quarter 1 2013 Panera Bread Earnings Conference Call transcript retrieved from LexisNexis, the
major news released was that President and Co-CEO, Bill Moreton, would be resigning from his positions
and taking on the role of Executive Vice Chairman. The transcript also stated positive growth prospects
for the company moving forward with 22 bakery-cafes opened during the quarter and hopes to open
115 new establishments throughout the remainder for the year. The company reported 17% EPS growth
over the previous year. The company cited decreases in EPS and sales due to harsh winter weather,
specifically in Midwestern and Northeastern sections of the country, in the first quarter diminishing
sales and repurchase of $20 million in shares.

Security Characteristic Line

The security characteristic line plots the realized excess return on the market portfolio on the x-axis
against the excess return on the asset on the y-axis. A negative slope as demonstrated by Panera for its
first quarter yields demonstrates the companys negative beta.










y = -0.1206x - 0.0006
R = 0.0053
-5.00%
-4.00%
-3.00%
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
-3.00% -2.00% -1.00% 0.00% 1.00% 2.00% 3.00%
R
(
P
N
R
A
)
-

R
f

Rm-Rf
PNRA Security Characteristic Line
Y
Linear (Y)
Index Model Regression Output
SUMMARY OUTPUT


Regression Statistics

Multiple R 0.073
R Square 0.005
Adjusted R Square -0.012
Standard Error 0.012

Observations 60


ANOVA

df SS MS F Significance F
Regression 1 4.6E-05 4.56971E-05 0.307 0.581
Residual 58 8.6E-03 0.000148611

Total 59 8.7E-03

Coefficients Standard Error t Stat P-value Lower 95%
Intercept -0.06% 0.00 -0.35 0.73 0.00
Beta -0.12 0.22 -0.55 0.58 -0.56

Upper 95% Lower 95.0% Upper 95.0%
Intercept 0.00 0.00 0.00
Beta 0.31 -0.56 0.31

The regression summary reveals the company has a beta of -0.12. A low beta typically means that the
security is less likely to move with the general market and is less sensitive to the market changes.
Negative betas can mean that the stock will return less than that of the risk-free rate return. This is not
the case with Panera Bread Company.







Abnormal Return & Cumulative Abnormal Return





Individual Abnormal Returns
Day Date AR
PNRA

3 4/26/13 -0.33%
2 4/25/13 -1.70%
1 4/24/13 -1.92%
0 4/23/13 0.85%
-1 4/22/13 -1.06%
-2 4/19/13 1.04%
-3 4/18/13 -1.36%
Cumulative Abnormal
Return
Window CAR
[-1, +3] -4.17%
[0, +3] -3.11%
[-1, +5] -1.81%
[0, +5] -0.75%
[-3, +3] -4.49%


Leading up to the announcement, the cumulative abnormal return was declining. On the date of the
announcement, abnormal returns were at a positive 0.85%. The following three days, the abnormal
return was negative before returning to positive. Speculation of the president and co- CEO stepping
down could have contributed to the negative abnormal returns leading up to the announcement. The
tSurprise for Paneras quarter 1 was very small at 0.37. Because of this one would expect very little
impact in the market.

-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
30 27 24 21 18 15 12 9 6 3 0 -3 -6 -9 -12 -15 -18 -21 -24 -27 -30
AR PNRA
Cum. AR
Sources:
http://www.lexisnexis.com
http://finance.yahoo.com/PNRA
http://www.reuters.com/finance/stocks/PNRA.O/key-developments/article/2687588