Potbelly Needs to Shake Noodles' Curse

It's time for Potbelly (NASDAQ: PBPB  ) to show the market that it doesn't need someone to order a sandwich to heat up some bread. The gourmet sandwich maker will report its first quarterly report as a public company tomorrow, and Potbelly can't afford to come up short.

The stock may be trading 84% higher since going public at $14 last month, but the stock has closed lower in four of its first five full weeks on the market. The stock that hit the market just a few months after Noodles & Co. (NASDAQ: NDLS  ) -- another growing fast-casual eatery -- soared in its own debut is feeling pretty mortal heading into tomorrow's crucial financial report.

Reality hasn't been as euphoric after these taste-bud-tickling debuts. There are plenty of publicly traded restaurants growing faster than either company. Despite various comparisons to niche-defining darling Chipotle Mexican Grill (NYSE: CMG  ) , neither chain is growing as quickly or as profitably as the popular burrito roller was when it hit the market.

It also doesn't help that Noodles & Co. fell short when it reported fresh financials last week. In its first full quarter since going public over the summer, the pasta-boiling chain saw revenue growth clock in lighter than expected at 15%, held back by a mere 2.1% increase in comps. Chipotle, on the other hand, grew its top line faster with same-store sales checking in nearly three times better. 

Potbelly investors have a right to be nervous since the gourmet sandwich shop has actually been moving slower than either Noodles & Co. or Chipotle. Revenue has moved just 12% higher through the first six months of 2013, and comps growth of 1.8%, 1.7%, and 3.4% over the past three years isn't going to sway those contending that Chipotle is the class act of this field. 

Another reason for Potbelly to have realistic expectations when it comes to tomorrow's results is that Panera Bread (NASDAQ: PNRA  ) -- the much larger gourmet-sandwich maker -- disappointed the market when it posted quarterly results. Panera lowered its guidance for the current quarter in terms of both comps and profitability, conceding that the differentiation in the market is harder to come by these days. Finding a quality sandwich is pretty easy these days. 

Potbelly's opportunity is that it has just roughly 300 locations at the moment. These is plenty of room to expand before it approaches Panera, Subway, Quiznos, and Jimmy John's in size. Going public should give Potbelly easier access to the capital necessary to grow its chain. But the climate doesn't appear very kind as it gears up to deliver its first quarterly report as a public company tomorrow afternoon.

One of the six growth stocks in this report also makes a pretty tasty sandwich
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