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Potbelly Corp (PBPB)
NASDAQ:PBPB
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Potbelly (PBPB) AI Stock Analysis

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PBPB

Potbelly

(NASDAQ:PBPB)

Rating:75Outperform
Price Target:
$14.50
▲(14.72%Upside)
Potbelly's overall stock score reflects strong earnings call results and positive technical analysis, supported by solid financial performance despite moderate leverage. Valuation indicates potential upside, making Potbelly an attractive investment opportunity.
Positive Factors
Franchising Momentum
Potbelly added a record 40 units worth of franchisee commitments in the first quarter, demonstrating strong interest and brand momentum.
Growth Strategy
Management meetings reaffirm an accelerating growth story at Potbelly.
Menu Innovation
New menu introductions, such as the Prime Rib Steak sandwich, are driving incremental visits and brand trials, helping differentiate Potbelly from competitors.
Negative Factors
Market Competition
Despite strong unit economics, the need for continuous menu innovation highlights the competitive nature of the market Potbelly operates in.
Operational Challenges
Investments in digital infrastructure are necessary to maintain service speed, order accuracy, and lower labor costs, indicating operational challenges.

Potbelly (PBPB) vs. SPDR S&P 500 ETF (SPY)

Potbelly Business Overview & Revenue Model

Company DescriptionPotbelly 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 MoneyPotbelly makes money primarily through the sale of food and beverages at its owned and franchised restaurant locations. The company's core revenue streams include direct sales from its menu offerings, which encompass sandwiches, salads, soups, and beverages to dine-in and take-out customers. Additionally, Potbelly generates revenue through its catering services, which cater to events and corporate functions. The company also earns revenue from franchise fees and royalties from franchise-operated locations. Significant factors contributing to Potbelly's earnings include its strategic location choices, menu innovation, and brand loyalty driven by its unique dining experience.

Potbelly Earnings Call Summary

Earnings Call Date:May 07, 2025
(Q1-2025)
|
% Change Since: 47.66%|
Next Earnings Date:Aug 06, 2025
Earnings Call Sentiment Positive
The earnings call reflected a strong performance with significant growth in system-wide sales, franchise expansion, and digital sales, supported by successful menu innovations. Despite a slight net loss and a decrease in transactions, the overall growth and improvements in shop-level margins and digital engagement indicate a positive outlook.
Q1-2025 Updates
Positive Updates
System-wide Sales Growth
System-wide sales for the first quarter of 2025 increased approximately 4.8% year-over-year to $140.7 million, with total revenue increasing approximately 2.3% year-over-year to $113.7 million.
Franchise Expansion
Potbelly opened at least four new restaurants during the first quarter and added 40 new shop commitments, bringing the total open and committed shop count to 766. Franchise revenue increased approximately 30.8% year-over-year to $4.7 million.
Digital Sales Growth
The digital business represented over 42% of total shop sales during the first quarter, an increase of approximately 200 basis points versus last year.
Menu Innovation Success
The introduction of new menu items, including the Prime Rib Steak Sandwich, Chili Mac, and Banana Pudding Shake, received positive customer reception and contributed to sales growth.
Improvement in Shop-Level Margins
Year-over-year shop-level margin improved to 13.7%, with adjusted EBITDA of $5.5 million, well above guidance.
Negative Updates
Slight Net Loss
The company reported a slight net loss of $62,000 for the quarter, although this was an improvement of $2.7 million over the prior year.
Decrease in Transactions
Same-store sales growth was driven by an increase in average check of 1.1%, but there was a 0.2% decrease in transactions.
Company Guidance
In the first quarter of 2025, Potbelly Corporation demonstrated robust financial performance and growth strategies. The company reported a system-wide sales increase of approximately 4.8% year-over-year to $140.7 million, with total revenue up by 2.3% to $113.7 million. Same-store sales grew by 0.9%, exceeding expectations, and shop-level margins expanded to 13.7%. Adjusted EBITDA for the quarter was $5.5 million, or 4.9% of total revenue, despite a year-over-year decrease owing to a prior year settlement benefit. The digital business represented over 42% of total shop sales, marking a 200 basis points increase from last year. Potbelly opened four new restaurants, bringing their total open and committed shop count to 766, and secured 40 new shop commitments. For the full year 2025, Potbelly reiterated guidance, anticipating same-store sales growth of 1.5% to 2.5%, unit growth of at least 38 openings, and adjusted EBITDA of $33 million to $34 million.

Potbelly Financial Statement Overview

Summary
Potbelly shows strong financial recovery with improving profitability and cash flows. The TTM gross profit margin is healthy at 31.3%, and net profit margin is 9.2%. However, a slight decline in gross profit margin suggests cost pressures. The balance sheet indicates moderate leverage with a debt-to-equity ratio of 2.53, but the equity ratio of 22.1% poses risk in downturns.
Income Statement
72
Positive
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
65
Positive
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
70
Positive
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.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue462.60M491.41M451.97M380.05M291.28M
Gross Profit153.66M162.05M126.19M94.10M47.00M
EBITDA21.29M21.90M44.07M-6.58M-51.30M
Net Income40.29M5.12M4.34M-23.62M-65.67M
Balance Sheet
Total Assets263.15M252.46M245.17M253.24M283.36M
Cash, Cash Equivalents and Short-Term Investments11.66M33.79M15.62M14.35M11.13M
Total Debt154.74M186.99M196.91M214.69M240.76M
Total Liabilities205.20M238.37M240.90M255.65M277.86M
Stockholders Equity58.39M14.69M4.48M-2.32M5.77M
Cash Flow
Free Cash Flow379.00K2.44M4.05M-13.92M-22.53M
Operating Cash Flow19.66M19.49M12.48M-4.87M-11.61M
Investing Cash Flow-19.08M-10.77M-8.43M-9.05M-10.92M
Financing Cash Flow-22.64M10.20M-2.78M17.15M14.85M

Potbelly Technical Analysis

Technical Analysis Sentiment
Positive
Last Price12.64
Price Trends
50DMA
11.48
Positive
100DMA
10.32
Positive
200DMA
10.22
Positive
Market Momentum
MACD
0.36
Positive
RSI
59.61
Neutral
STOCH
61.10
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 12.64 is above the 20-day moving average (MA) of 12.56, above the 50-day MA of 11.48, and above the 200-day MA of 10.22, indicating a bullish trend. The MACD of 0.36 indicates Positive momentum. The RSI at 59.61 is Neutral, neither overbought nor oversold. The STOCH value of 61.10 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PBPB.

Potbelly Risk Analysis

Potbelly disclosed 58 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 (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
75
Outperform
$381.38M8.99117.47%-3.96%1036.87%
70
Outperform
$321.26M12.579.68%1.22%6.59%
67
Neutral
$137.76M36.29-1.62%0.71%14.40%-114.79%
64
Neutral
$398.28M16.60-102.54%2.57%6.91%22.33%
63
Neutral
$17.10B10.79-8.01%2.94%1.62%-25.73%
56
Neutral
$123.62M92.02%-1.68%-140.83%
40
Underperform
$47.78M-978.37%-0.61%-200.32%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
PBPB
Potbelly
12.64
5.42
75.07%
NATH
Nathan's Famous
94.47
22.33
30.95%
RRGB
Red Robin Gourmet
6.97
1.21
21.01%
NDLS
Noodles & Co
0.95
-0.78
-45.09%
LOCO
El Pollo LoCo
10.69
-0.85
-7.37%
GENK
GEN Restaurant Group, Inc. Class A
4.20
-3.72
-46.97%

Potbelly Corporate Events

Executive/Board ChangesShareholder Meetings
Potbelly Corporation Holds 2025 Annual Stockholders Meeting
Neutral
May 16, 2025

On May 15, 2025, Potbelly Corporation held its 2025 Annual Meeting of Stockholders where key decisions were made, including the election of eight directors, ratification of KPMG LLP as the independent auditor for 2025, approval of executive compensation for 2024, and an amendment to increase shares in the Long-Term Incentive Plan. These decisions are expected to impact the company’s governance and financial strategies, potentially influencing its market position and stakeholder interests.

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.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jul 24, 2025