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PBPB

Potbelly NasdaqGS:PBPB Stock Report

Last Price

US$4.48

Market Cap

US$128.6m

7D

-9.9%

1Y

-33.2%

Updated

26 Sep, 2022

Data

Company Financials +
PBPB fundamental analysis
Snowflake Score
Valuation2/6
Future Growth0/6
Past Performance0/6
Financial Health2/6
Dividends0/6

PBPB Stock Overview

Potbelly Corporation, through its subsidiaries, owns, operates, and franchises Potbelly sandwich shops.

Potbelly Corporation Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Potbelly
Historical stock prices
Current Share PriceUS$4.48
52 Week HighUS$7.22
52 Week LowUS$4.31
Beta1.14
1 Month Change-25.33%
3 Month Change-18.84%
1 Year Change-33.23%
3 Year Change2.75%
5 Year Change-63.58%
Change since IPO-85.44%

Recent News & Updates

Sep 17

Potbelly: Strong Sales Performance

Summary Potbelly reported +17.2% same-store sales growth in Q2 2022. This was significantly driven by the continued recovery in Central Business District and Airport stores. Those stores will likely drive less sales improvement in the future as foot traffic levels reach pre-pandemic levels. However, Potbelly's per store sales levels are already close to 20% higher than pre-pandemic levels. Wage and ingredient inflation are pressuring Potbelly's margins, keeping its shop-level margins several percent below pre-pandemic levels despite improvement. Potbelly (PBPB) has impressed with its sales performance, delivering +17.2% same-store sales growth in Q2 2022. This was partially driven by the tailwinds from the foot traffic in the Central Business District and Airport areas largely recovering to pre-pandemic levels. While Potbelly cannot count on foot traffic in those areas continuing to increase significantly higher, it is already at a point where its total revenues are higher than pre-pandemic (2018/2019) levels and its per store sales are around 20% higher than that pre-pandemic period. Potbelly has exceeded my expectations for sales growth, although it still faces some challenges in improving shop-level margins. Ingredient cost inflation and the higher wage environment have contributed to its shop-level margins remaining several percent below pre-pandemic levels recently. This is despite Potbelly's strong efforts to mitigate cost inflation and despite the efficiency benefits from increased per store sales. The strong sales performance boosts my estimate of Potbelly's value to $6 to $7 per share though. Excellent Sales Performance Potbelly has been doing quite well in terms of being able to drive sales growth, with its Q2 2022 revenues coming in at the high-end of its guidance as it reported record average unit volumes. Potbelly reported +24.4% same-store sales growth in Q1 2022, followed by +17.2% same-store sales growth in Q2 2022. It also appears to expect approximately +12% same-store sales growth in Q3 2022. Potbelly's same-store sales growth has been particularly driven by strength in its Central Business District and Airport shops which had +61.3% and 27.9% same-store sales growth respectively. This makes sense given how those areas were the most affected by the pandemic and are now recovering. Potbelly's year-over-year growth is slowing as sales in those areas normalize, but its total sales seems to be stabilizing at a much higher level than pre-pandemic. For example, Potbelly reported $116 million in revenues in Q2 2022 compared to $106 million in Q2 2019 and $110 million in Q2 2018. As well, Potbelly also had approximately 10% more company-operated shops in Q2 2018 and Q2 2019 than now, so the average store generates close to 20% more revenue now. Inflationary Pressure Potbelly's shop-level margins have also improved to 11.4% in Q2 2022, better than its guidance for 9.0% to 11.0% shop-level margins for the quarter. Inflationary pressure is hampering Potbelly's ability to significantly increase its shop-level margins further though. Potbelly's guidance for Q3 2022 is for 9.0% to 12.0% shop-level margins, which is only slightly better than its guidance for Q2 2022. As well, the 11.4% shop-level margins for Q2 2022 would end up near the higher end of its Q3 2022 guidance. Potbelly is dealing with a higher wage environment, although its labor expenses are actually going down as a percentage of revenues due to the strong sales performance. Potbelly also noted that its food, beverage and packaging costs (typically adding up to a mid-to-high twenties percentage of its revenue) is seeing up to 18% inflation in 2022. Potbelly reported 15% shop-level margins in 2019 and 16.7% shop-level margins in 2018, although it made accounting changes in Q1 2022 to put some advertising and marketing expenses at the shop level. This change reduces its shop-level margins by approximately 1%, so based on current accounting its shop-level margins would have been around 14% in 2019 and 15.7% in 2018. Potbelly has done a good job to mitigate the impact of inflation so far, but the inflationary pressure will slow its ability to return its shop-level margins to 2018/2019 levels. Notes On Valuation I am generally skeptical about Potbelly's ability to reach its 2024 targets, which appear to involve another 15% to 20% in same-store sales growth from current levels, along with 16+% shop-level margins. The concerns around consumer spending and inflation will likely prevent Potbelly from achieving those target.

Jun 02

Potbelly Corp.: The Picture Is Improving, But Risks Remain

Potbelly Corporation had a difficult time during the pandemic, but the fundamental condition for the restaurant chain is improving. Management has high hopes for the future, but the company is still early in what might be a turnaround. Shares look cheap, but the company deserves to trade at a low multiple at this time.

Shareholder Returns

PBPBUS HospitalityUS Market
7D-9.9%-10.7%-6.9%
1Y-33.2%-33.9%-23.7%

Return vs Industry: PBPB matched the US Hospitality industry which returned -33.9% over the past year.

Return vs Market: PBPB underperformed the US Market which returned -23% over the past year.

Price Volatility

Is PBPB's price volatile compared to industry and market?
PBPB volatility
PBPB Average Weekly Movement6.4%
Hospitality Industry Average Movement7.3%
Market Average Movement6.9%
10% most volatile stocks in US Market15.7%
10% least volatile stocks in US Market2.8%

Stable Share Price: PBPB is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: PBPB's weekly volatility (6%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
19775,500Bob Wrighthttps://www.potbelly.com

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 Fundamentals Summary

How do Potbelly's earnings and revenue compare to its market cap?
PBPB fundamental statistics
Market CapUS$128.58m
Earnings (TTM)-US$12.77m
Revenue (TTM)US$418.67m

0.3x

P/S Ratio

-10.1x

P/E Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
PBPB income statement (TTM)
RevenueUS$418.67m
Cost of RevenueUS$310.57m
Gross ProfitUS$108.10m
Other ExpensesUS$120.87m
Earnings-US$12.77m

Last Reported Earnings

Jun 26, 2022

Next Earnings Date

n/a

Earnings per share (EPS)-0.44
Gross Margin25.82%
Net Profit Margin-3.05%
Debt/Equity Ratio-248.3%

How did PBPB perform over the long term?

See historical performance and comparison