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Potbelly Corp (PBPB)
NASDAQ:PBPB
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Potbelly
(NASDAQ:PBPB)
60Neutral
Positive Factors
Earnings
Potbelly delivered solid fourth quarter results, with both top and bottom line results above expectations, despite a challenging operating environment.
Franchise Growth
Revenue from franchise royalties and fees increased 24% year-over-year, driven by strong franchise unit growth.
Negative Factors
Weather Impact
Poor winter weather conditions are expected to have a negative impact on same-store sales, estimated to cost Potbelly 150 basis points.
Potbelly (PBPB) vs. S&P 500 (SPY)
Market Cap
$289.83M
Dividend YieldN/A
Average Volume (3M)306.10K
Price to Earnings (P/E)7.4
Beta (1Y)1.98
Revenue Growth-5.86%
EPS Growth672.77%
CountryUS
Employees5,000
SectorConsumer Cyclical
Sector Strength49
IndustryRestaurants & Bars
Share Statistics
EPS (TTM)1.31
Shares Outstanding29,879,503
10 Day Avg. Volume443,481
30 Day Avg. Volume306,103
Financial Highlights & Ratios
PEG Ratio0.01
Price to Book (P/B)N/A
Price to Sales (P/S)0.62
Price to Cash Flow (P/CF)10.80
P/FCF Ratio10.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$16.67Price Target Upside71.86% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Potbelly Business Overview & Revenue Model
Company DescriptionPotbelly Corporation (PBPB) is a publicly traded company that operates in the fast-casual restaurant sector. Founded in 1977 and headquartered in Chicago, Illinois, Potbelly offers a diverse menu featuring toasted sandwiches, salads, soups, and other made-to-order items. The company is known for its warm, inviting atmosphere and its focus on delivering high-quality, fresh ingredients. Potbelly operates company-owned locations and franchises across the United States, providing customers with a unique dining experience characterized by its iconic potbelly stove decor and live music in some locations.
How the Company Makes MoneyPotbelly generates revenue primarily through the sale of food and beverages at its company-owned and franchised restaurant locations. The company's key revenue streams include in-store dining, takeout, delivery, and catering services. Potbelly also earns income from franchise fees and royalties from its franchised locations. Additionally, the company may engage in strategic partnerships and promotional activities to drive sales and enhance brand visibility. Effective supply chain management and cost control measures are significant factors contributing to Potbelly's profitability, ensuring that operational expenses are managed while maximizing revenue from its diverse menu offerings.
Potbelly Financial Statement Overview
Summary
Potbelly's financial statements show a return to profitability with improved margins and equity, yet they face challenges with high leverage and limited free cash flow. The overall financial performance indicates recovery from past losses but highlights the need for revenue growth and debt management.Income Statement
Potbelly's income statement shows a mixed performance. The company achieved a significant improvement in net profit margin, moving from a net loss in previous years to a positive net income in 2024. However, revenue has declined compared to 2023, indicating potential challenges in sales growth. The gross profit margin has improved sharply, suggesting better cost management. Despite these positive trends, the EBIT and EBITDA margins remain relatively low, indicating room for operational improvements.68
Positive
Balance Sheet
The balance sheet reflects a strong increase in stockholders' equity, reflecting improved profitability. However, the debt-to-equity ratio remains high, suggesting significant leverage and potential financial risk. The equity ratio is low, but the improvement in equity levels is a positive sign. The company's asset base has remained relatively stable, but high liabilities continue to be a concern.60
Neutral
Cash Flow
Potbelly's cash flow statement indicates a stable operating cash flow, which supports its ongoing operations. Free cash flow remains positive but minimal, limiting the company's ability to invest heavily in growth opportunities or reduce debt quickly. The operating cash flow to net income ratio is positive, showing operational efficiency, but the free cash flow to net income ratio suggests limited cash generation relative to profit.55
Neutral
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 471.72M | 462.60M | 491.41M | 451.97M | 380.05M | 291.28M | Gross Profit |
| 132.51M | 462.60M | 162.05M | 126.19M | 94.10M | 47.00M | EBIT |
| 13.86M | 10.99M | 10.01M | 950.00K | -17.36M | -57.12M | EBITDA |
| 19.87M | 10.99M | 21.90M | 44.07M | -1.45M | -37.29M | Net Income Common Stockholders |
| 38.42M | 40.29M | 5.12M | 4.34M | -23.62M | -65.67M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 19.77M | 11.66M | 33.79M | 15.62M | 14.35M | 11.13M | Total Assets |
| 153.22M | 263.15M | 252.46M | 245.17M | 253.24M | 283.36M | Total Debt |
| 0.00 | 150.74M | 186.99M | 196.91M | 214.69M | 240.76M | Net Debt |
| -19.77M | 139.07M | 153.21M | 181.29M | 200.34M | 229.63M | Total Liabilities |
| 57.68M | 205.20M | 238.37M | 240.90M | 255.65M | 277.86M | Stockholders Equity |
| 95.17M | 58.39M | 14.69M | 4.27M | -2.42M | 5.77M |
| Cash Flow | Free Cash Flow | ||||
| 229.00K | 379.00K | 2.44M | 4.05M | -13.92M | -22.53M | Operating Cash Flow |
| 18.05M | 19.66M | 19.49M | 12.48M | -4.87M | -11.61M | Investing Cash Flow |
| -12.88M | -19.08M | -10.77M | -8.43M | -9.05M | -10.92M | Financing Cash Flow |
| -24.90M | -22.64M | 10.20M | -2.78M | 17.15M | 14.85M |
Potbelly Technical Analysis
Negative
9.70
Price Trends
11.37
Negative
10.31
Negative
9.06
Positive
Market Momentum
-0.42
Positive
31.97
Neutral
5.93
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PBPB, the sentiment is Negative. The current price of 9.7 is below the 20-day moving average (MA) of 11.89, below the 50-day MA of 11.37, and above the 200-day MA of 9.06, indicating a neutral trend. The MACD of -0.42 indicates Positive momentum. The RSI at 31.97 is Neutral, neither overbought nor oversold. The STOCH value of 5.93 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PBPB.
Potbelly Risk Analysis
Potbelly disclosed 56 risk factors in its most recent earnings report. Potbelly reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Potbelly Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $67.74B | 44.86 | 45.67% | ― | 14.61% | 25.68% | |
68 Neutral | $3.69B | 368.64 | 2.23% | ― | 15.18% | -48.78% | |
66 Neutral | $315.64M | 12.40 | 10.05% | ― | 0.93% | 15.12% | |
61 Neutral | $6.13B | 61.39 | -16.09% | 0.46% | 36.03% | 57.51% | |
60 Neutral | $289.83M | 7.38 | 110.27% | ― | -5.86% | 672.77% | |
60 Neutral | $12.39B | 10.47 | 1.07% | 3.58% | 1.64% | -18.33% | |
48 Neutral | $55.80M | ― | -335.60% | ― | -2.01% | -267.04% |
* Consumer Cyclical Sector Average
Performance Comparison
PBPB
Potbelly
9.70
-1.74
-15.21%
CMG
Chipotle
49.98
-4.47
-8.21%
NDLS
Noodles & Co
1.22
-0.68
-35.79%
LOCO
El Pollo LoCo
10.60
2.01
23.40%
SHAK
Shake Shack
86.74
-16.12
-15.67%
WING
Wingstop
213.36
-129.76
-37.82%
Potbelly Earnings Call Summary
Earnings Call Date: Mar 6, 2025 | % Change Since: -17.87% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong growth in adjusted EBITDA, successful unit expansion, and positive impacts from menu innovation and digital sales growth. However, unusual weather impacts and some cost challenges were noted as lowlights.Highlights
Strong Adjusted EBITDA Growth
Adjusted EBITDA grew by 15% through expanded shop margins and cost management.
Unit Growth and Expansion
23 new shops opened in 2024, with 115 units added to the open and committed shop total, aiming for at least 38 new openings in 2025.
Menu Innovation Success
Introduction of new signature sandwiches and sauces leading to positive customer feedback and increased customization options.
Digital Sales Growth
Digital sales represented over 40% of total shop sales, increasing by approximately 100 basis points year-over-year.
Franchise Revenue Increase
Franchise revenue increased by 24%, driven by a 22% increase in franchise units.
Positive Customer Reception
New menu items and digital initiatives received strong positive feedback from customers.
Lowlights
Weather Impact on Sales
Unusual weather impacts affected Q1 sales, with an estimated 150 basis points negative impact on same-store sales.
Flat Total Revenue
Total revenue was flat year-over-year when excluding the impact of the 53rd week in 2023 and refranchising.
Slight Transaction Decline
Same-store sales growth of 0.3% was offset by a 1.9% decrease in transactions.
Legal and Professional Service Costs
A legal accrual of $1.8 million for a class action lawsuit and nonrecurring professional services impacted G&A expenses.
Company Guidance
During the call, Potbelly provided guidance for 2025, highlighting key metrics and strategic initiatives. The company anticipates same-store sales growth of 1.5% to 2.5% and plans to open at least 38 new units, continuing the momentum from the 23 new shops opened in 2024. Adjusted EBITDA is projected to be approximately $33 to $34 million. Despite weather-related impacts expected to reduce first-quarter same-store sales growth by 150 basis points, Potbelly forecasts a solid foundation for the rest of the year. The call emphasized menu innovation, digital investments, and strategic cost management as drivers for future growth. Additionally, the company plans to accelerate its franchise development while also opening up to 20 company-operated shops annually in the coming years to enhance its operational footprint and leverage existing infrastructure.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.