Potbelly (PBPB) AI Stock Analysis

• Market Cap: $248.62M
• Dividend Yield: N/A
• Average Volume (3M): 369.31K
• Price to Earnings (P/E): 6.3
• Beta (1Y): 1.65
• Revenue Growth: -5.86%
• EPS Growth: 672.77%
• Country: US
• Employees: 5,000
• Sector: Consumer Cyclical
• Sector Strength: 63
• Industry: Restaurants
• EPS (TTM): 1.31
• Shares Outstanding: 30,172,226
• 10 Day Avg. Volume: 386,659
• 30 Day Avg. Volume: 369,310
• PEG Ratio: 0.00932
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.60
• Price to Cash Flow (P/CF): 10.50
• P/FCF Ratio: 10.50
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $15.00
• Price Target Upside: 82.04% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

Potbelly's financial performance shows improvement with profitability returning, but high leverage and minimal free cash flow remain concerns. The technical indicators point to a bearish trend, while valuation suggests the stock is undervalued. Positive earnings call sentiment provides some optimism despite operational challenges.

Positive Factors

Financial Performance

Potbelly delivered solid fourth quarter results, with both top and bottom line results above expectations, despite a challenging operating environment.

Franchise Expansion

The company’s strong development visibility is highlighted by a growing pipeline of commitments for new franchised locations and attractive unit economics generated by recent franchised openings.

Negative Factors

Competitive Environment

The competitive environment remains difficult with discounting at quick-serve and full-service restaurants and consumers remain squeezed.

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 Business Overview & Revenue Model

Company Description

Potbelly Corporation, through its subsidiaries, owns, operates, and franchises Potbelly sandwich shops. As of December 26, 2021, it had 443 shops in 33 states and the District of Columbia, which included 397 shops and 46 franchisees operated shops. The company was formerly known as Potbelly Sandwich Works, Inc. and changed its name to Potbelly Corporation in 2002. Potbelly Corporation was founded in 1977 and is headquartered in Chicago, Illinois.

How the Company Makes Money

Potbelly 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 is showing signs of recovery with a return to profitability and improved margins. However, high leverage and minimal free cash flow pose financial challenges. Continued focus on revenue growth and debt management is essential.

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.

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.

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.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
462.60M	491.41M	451.97M	380.05M	291.28M
	Gross Profit
462.60M	162.05M	126.19M	94.10M	47.00M
	EBIT
10.99M	10.01M	950.00K	-17.36M	-57.12M
	EBITDA
21.29M	21.90M	44.07M	-1.45M	-37.29M
	Net Income Common Stockholders
40.29M	5.12M	4.34M	-23.62M	-65.67M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
11.66M	33.79M	15.62M	14.35M	11.13M
	Total Assets
263.15M	252.46M	245.17M	253.24M	283.36M
	Total Debt
150.74M	186.99M	196.91M	214.69M	240.76M
	Net Debt
139.07M	153.21M	181.29M	200.34M	229.63M
	Total Liabilities
205.20M	238.37M	240.90M	255.65M	277.86M
	Stockholders Equity
58.39M	14.69M	4.27M	-2.42M	5.77M
Cash Flow		Free Cash Flow
379.00K	2.44M	4.05M	-13.92M	-22.53M
	Operating Cash Flow
19.66M	19.49M	12.48M	-4.87M	-11.61M
	Investing Cash Flow
-19.08M	-10.77M	-8.43M	-9.05M	-10.92M
	Financing Cash Flow
-22.64M	10.20M	-2.78M	17.15M	14.85M

Potbelly Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 8.24
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

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 8.24 is below the 20-day moving average (MA) of 9.15, below the 50-day MA of 10.71, and below the 200-day MA of 9.19, indicating a bearish trend. The MACD of -0.59 indicates Positive momentum. The RSI at 32.43 is Neutral, neither overbought nor oversold. The STOCH value of 20.19 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PBPB.

Potbelly Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NATH	71 Outperform	$379.67M	16.03	-102.54%	2.15%	6.83%	24.77%
LOCO	70 Outperform	$287.05M	11.17	10.05%	―	0.93%	15.12%
PBPB	59 Neutral	$248.62M	6.27	110.27%	―	-5.86%	672.77%
Sector *	59 Neutral	$11.48B	10.33	-0.21%	4.02%	1.19%	-15.83%
GENK	46 Neutral	$137.87M	29.84	5.12%	―	15.12%	-46.08%
NDLS	42 Neutral	$44.25M	―	-335.60%	―	-2.01%	-267.04%
RRGB	41 Neutral	$53.45M	―	92.02%	―	-4.19%	-266.52%