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Potbelly Corp (PBPB)
NASDAQ:PBPB
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Potbelly
(NASDAQ:PBPB)
73Outperform
Positive Factors
Franchise Expansion
Potbelly added a record 40 units of franchisee commitments, indicating strong interest and momentum in franchising.
Menu Innovation
A powerful value platform and menu innovation, including the Prime Rib Sandwich, are driving solid performance for Potbelly.
Traffic and Sales Trends
Potbelly reported strong acceleration in traffic and SSS trends, beating consensus estimates.
Negative Factors
Higher Expenses
Adjusted EBITDA was partly offset by higher-than-expected G&A.
Weather Impact
First-quarter comps were penalized by roughly 150 basis points due to inclement weather impacting four weeks.
Potbelly (PBPB) vs. S&P 500 (SPY)
Market Cap
$308.66M
Dividend YieldN/A
Average Volume (3M)278.31K
Price to Earnings (P/E)7.3
Beta (1Y)1.49
Revenue Growth-3.96%
EPS Growth1036.87%
CountryUS
Employees5,000
SectorConsumer Cyclical
Sector Strength75
IndustryRestaurants
Share Statistics
EPS (TTM)0.00
Shares Outstanding30,172,218
10 Day Avg. Volume236,760
30 Day Avg. Volume278,315
Financial Highlights & Ratios
PEG Ratio1.56
Price to Book (P/B)5.05
Price to Sales (P/S)0.00
P/FCF Ratio785.75
Enterprise Value/Market Cap1.43
Enterprise Value/Revenue0.23
Enterprise Value/Gross Profit3.56
Enterprise Value/Ebitda5.13
Forecast
1Y Price Target
$16.67Price Target Upside62.95% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
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 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 performance reflects a recovery from past losses with a return to profitability. Improved net profit margin and gross profit margin indicate better cost management, but challenges remain with declining revenue and low EBIT and EBITDA margins. The balance sheet shows increased equity but high leverage, and cash flow is stable yet limited for growth investments.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 | ||||
| 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 |
| 153.66M | 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 |
| 154.74M | 186.99M | 196.91M | 214.69M | 240.76M | Net Debt |
| 143.07M | 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
Positive
10.23
Price Trends
9.05
Positive
10.20
Positive
9.34
Positive
Market Momentum
0.36
Negative
65.76
Neutral
83.40
Negative
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 10.23 is above the 20-day moving average (MA) of 8.93, above the 50-day MA of 9.05, and above the 200-day MA of 9.34, indicating a bullish trend. The MACD of 0.36 indicates Negative momentum. The RSI at 65.76 is Neutral, neither overbought nor oversold. The STOCH value of 83.40 is Negative, 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 (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $308.66M | 7.28 | 117.47% | ― | -3.96% | 1036.87% | |
71 Outperform | $426.66M | 18.01 | -102.54% | 1.92% | 6.83% | 24.77% | |
61 Neutral | $6.97B | 11.38 | 2.88% | 3.90% | 2.64% | -22.07% | |
60 Neutral | $286.10M | 11.19 | 9.68% | ― | 1.22% | 6.59% | |
44 Neutral | $132.84M | 36.29 | -1.62% | ― | 14.40% | -114.79% | |
41 Neutral | $40.89M | ― | -978.37% | ― | -0.61% | -200.32% | |
38 Underperform | $57.80M | ― | 92.02% | ― | -4.19% | -266.52% |
* Consumer Cyclical Sector Average
Performance Comparison
PBPB
Potbelly
10.18
1.47
16.88%
NATH
Nathan's Famous
106.25
39.00
57.99%
RRGB
Red Robin Gourmet
3.08
-3.93
-56.06%
NDLS
Noodles & Co
0.85
-1.26
-59.72%
LOCO
El Pollo LoCo
9.29
-1.48
-13.74%
GENK
GEN Restaurant Group, Inc. Class A
4.06
-8.91
-68.70%
Potbelly Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q1-2025)
| % Change Since: 19.51%|
Next Earnings Date:Jul 31, 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 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.
Spark’s Take on PBPB Stock
According to Spark, TipRanks’ AI Analyst, PBPB is a Outperform.
Potbelly’s overall stock score of 73 reflects a positive outlook driven by solid financial recovery and appealing valuation. The company’s return to profitability and improved margins are major strengths. However, the challenges of high leverage and limited cash flow, coupled with mixed technical indicators, present ongoing risks. The positive sentiment from the earnings call and growth in digital sales further support the stock’s potential, offsetting some of the financial concerns.
To see Spark’s full report on PBPB stock, click here.
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.