Potbelly (PBPB) AI Stock Analysis

• Market Cap: $515.34M
• Dividend Yield: N/A
• Average Volume (3M): 1.39M
• Price to Earnings (P/E): 47.8
• Beta (1Y): 1.61
• Revenue Growth: -1.72%
• EPS Growth: -70.31%
• Country: US
• Employees: 5,000
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Restaurants
• EPS (TTM): 0.09
• Shares Outstanding: 30,260,672
• 10 Day Avg. Volume: 1,262,332
• 30 Day Avg. Volume: 1,389,942
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 0.99
• Enterprise Value/Revenue: 1.10
• Enterprise Value/Gross Profit: 3.51
• Enterprise Value/Ebitda: 20.83
• 1Y Price Target: $17.69
• Price Target Upside: 3.88% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 5

• Rating: 68 Neutral
• Price Target: $18.50 ▲(8.63% Upside)

Potbelly's strong earnings call performance and financial recovery are significant strengths, contributing positively to the overall score. However, technical indicators suggest overbought conditions, and the high P/E ratio raises valuation concerns.

Positive Factors

Shop Expansion

Exceeding shop expansion targets indicates strong operational execution and potential for increased market presence, supporting long-term growth.

Digital Sales Growth

Growth in digital sales enhances customer convenience and engagement, positioning Potbelly well in the evolving digital landscape of the restaurant industry.

Franchise Growth

A record number of new franchise commitments strengthens Potbelly's growth strategy, leveraging franchisee capital for expansion and brand reach.

Negative Factors

Increased G&A Expenses

Rising G&A expenses can pressure margins and profitability, potentially impacting financial flexibility and operational efficiency over time.

Moderate Leverage

Moderate leverage may limit Potbelly's ability to navigate economic downturns, affecting its capacity to invest in growth or weather financial stress.

Acquisition by RaceTrac

The acquisition by RaceTrac may lead to strategic shifts or integration challenges, impacting Potbelly's operational autonomy and long-term strategic direction.

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 retail locations. The company operates a franchise model, where a portion of its revenue comes from franchise fees and royalties. Key revenue streams include in-store sales, online orders, and catering services, allowing for a broad customer base that includes individuals, families, and corporate clients. Additionally, Potbelly has developed partnerships with delivery services to enhance its reach and convenience, contributing to its earnings. Seasonal promotions and limited-time menu offerings also play a significant role in driving sales and attracting customers.

Potbelly Financial Statement Overview

Summary

Potbelly shows strong financial recovery with improving profitability and cash flows. The income statement reflects healthy profitability with a net profit margin of 9.2%. The balance sheet indicates strengthening equity, though moderate leverage remains a risk. Cash flow performance is solid, with a significant free cash flow growth rate, though free cash flow relative to earnings is limited.

Income Statement

Potbelly has shown a positive trajectory in revenue and profitability. The TTM (Trailing-Twelve-Months) gross profit margin stands at 31.3% and the net profit margin at 9.2%, indicating healthy profitability. The revenue growth rate from 2024 to TTM is modest at 0.5%, reflecting stability. However, the slight decline in gross profit margin from 33.2% in 2024 suggests some cost pressures.

Balance Sheet

The company's balance sheet shows improvement in equity with a debt-to-equity ratio of 2.53 in TTM, down from 2.65 in 2024. Return on equity is strong at 73.1%, driven by improved profitability. However, the equity ratio of 22.1% indicates moderate leverage, posing potential risk in downturn scenarios.

Cash Flow

Potbelly's cash flow performance is solid with a free cash flow growth rate of 92.2% from 2024 to TTM. The operating cash flow to net income ratio of 0.64 suggests efficient cash generation relative to net income. Despite this, the free cash flow to net income ratio is 0.17, indicating limited free cash flow relative to earnings.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	465.13M	462.60M	491.41M	451.97M	380.05M	291.28M
Gross Profit	145.64M	153.66M	162.05M	126.19M	94.10M	47.00M
EBITDA	24.50M	21.29M	21.90M	44.07M	-6.58M	-51.30M
Net Income	43.00M	40.29M	5.12M	4.34M	-23.62M	-65.67M
Balance Sheet
Total Assets	265.76M	263.15M	252.46M	245.17M	253.24M	283.36M
Cash, Cash Equivalents and Short-Term Investments	14.76M	11.66M	33.79M	15.62M	14.35M	11.13M
Total Debt	148.64M	154.74M	186.99M	196.91M	214.69M	240.76M
Total Liabilities	207.40M	205.20M	238.37M	240.90M	255.65M	277.86M
Stockholders Equity	58.87M	58.39M	14.69M	4.48M	-2.32M	5.77M
Cash Flow
Free Cash Flow	7.29M	379.00K	2.44M	4.05M	-13.92M	-22.53M
Operating Cash Flow	27.60M	19.66M	19.49M	12.48M	-4.87M	-11.61M
Investing Cash Flow	-20.27M	-19.08M	-10.77M	-8.43M	-9.05M	-10.92M
Financing Cash Flow	-5.23M	-22.64M	10.20M	-2.78M	17.15M	14.85M

Potbelly Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 17.03
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PBPB, the sentiment is Positive. The current price of 17.03 is above the 20-day moving average (MA) of 15.51, above the 50-day MA of 13.64, and above the 200-day MA of 11.29, indicating a bullish trend. The MACD of 1.15 indicates Negative momentum. The RSI at 82.59 is Negative, neither overbought nor oversold. The STOCH value of 57.14 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PBPB.

Potbelly Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LOCO	70 Outperform	300.25M	11.89	9.02%	―	1.85%	-0.99%
NATH	70 Outperform	445.80M	18.51	-145.50%	1.83%	6.38%	9.98%
PBPB	68 Neutral	$515.34M	47.84	19.65%	―	-1.72%	-70.31%
RRGB	55 Neutral	125.01M	-2.05	92.02%	―	-3.09%	-30.16%
GENK	44 Neutral	96.49M	-19.89	-4.84%	1.02%	10.67%	-181.88%
NDLS	41 Neutral	28.75M	-0.66	649.09%	―	-1.23%	-68.38%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%

Potbelly Corporate Events

Potbelly Announces Merger Agreement with RaceTrac

On September 10, 2025, Potbelly Corporation announced a merger agreement with RaceTrac, Inc., a leading convenience retailer, in a transaction valued at approximately $566 million. The deal involves RaceTrac acquiring all outstanding shares of Potbelly for $17.12 per share, representing a 47% premium over Potbelly’s 90-trading-day volume-weighted average price. The acquisition is expected to close in the fourth quarter of 2025, subject to customary closing conditions and regulatory approvals. This strategic move aims to leverage complementary strengths in franchising, operations, and marketing to accelerate growth and expand Potbelly’s presence while maintaining its neighborhood sandwich shop experience.

The most recent analyst rating on (PBPB) stock is a Buy with a $14.00 price target. To see the full list of analyst forecasts on Potbelly stock, see the PBPB Stock Forecast page.