I enjoy visiting Panera Bread (NASDAQ:PNRA) once in a blue moon; it's the stock I haven't been able to stomach. However, for all my previous bearishness, there seemed to me to be some positive signs in its second-quarter earnings, even though investors at large didn't seem to like some of the tidings.

Panera's net income increased 24% to $15.7 million, or $0.52 per share. Revenue increased by 27% to $320.9 million. In addition, Panera was able to guide for higher-than-expected third-quarter and 2008 results.

Operating margin actually increased by 100 basis points, which strikes me as a bit astonishing when costs are going up at an alarming rate (for example, Panera's been rather vulnerable to skyrocketing wheat prices). Historically, Panera's shown some problems growing profitably, so this seems like the kind of message investors should welcome.

However, Panera said Wall Street's estimates for 2009 may be too high. Not surprisingly, management blamed the economy: "The company currently believes that estimates reflecting a growth rate for fiscal 2009 of greater than 20% are not prudent at this time given anticipated commodity cost inflation of 5% to 6%, the projected state of the economy in 2009, and the potential for even greater commodity costs and economic disruptions." All righty, then -- but maybe we should give some credit for talking turkey.  

Fears of high commodity prices pressuring profitability in a difficult economy are nothing new; they've hit quick-serve rivals like Starbucks (NASDAQ:SBUX), McDonald's (NYSE:MCD), and Chipotle (NYSE:CMG) (NYSE:CMG-B) recently.

As much as I've been a Panera bear, I'm impressed that the company delivered a good quarter in this difficult environment. In addition, in the company's conference call, it said it has paid down $65 million of the $75 million it borrowed to fund its stock repurchase earlier this year, and that seems like a nice bonus, too.

I'm not sold on investing in Panera at this price; I don't think this quarter proves things are turned around for good, and the company faces major economic headwinds just like everybody else. Therefore, a trailing price-to-earnings ratio of 27 sounds way too pricey to me. However, improving margins and efficiency make this a stock to keep an eye on as the year progresses.  

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Panera Bread is a Motley Fool Hidden Gems PayDirt selection. Chipotle Mexican Grill is a Motley Fool Hidden Gems and Motley Fool Rule Breakers pick. Starbucks is a Motley Fool Inside Value and Motley Fool Stock Advisor pick. The Fool owns shares of Starbucks. Try any of our Foolish newsletters today, free for 30 days.

Alyce Lomax owns shares of Starbucks. The Fool has a disclosure policy.