Why Potbelly Corp. Shares Crumbled

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Potbelly  (NASDAQ: PBPB  ) were falling apart today, losing as much as 11% after a disappointing earnings report.

So what: The newly public sandwich chain actually beat estimates on the bottom line, posting an adjusted profit of $0.06 against expectations of $0.04. But sales growth was light, improving just 1.7% to $74.8 million, missing the consensus at $76 million as comparable sales increased just 0.7%. CEO Aylwin Lewis said he was "pleased with fourth-quarter results," but noted the "external environment was disruptive." Still, the company managed to grow adjusted net income 35% in the quarter. 

Now what: For the current year, management expects adjusted net income growth of 25% to 35% on low-single-digit same-store sales growth. For what's supposed to be a growth stock, that same-stores sales projection is awfully slow. Potbelly continues to expand, planning to grow its store base by about 15% in the new year, but without respectable organic growth, this brand, and consequently the stock, may not have lasting power. Shares popped after the IPO last year, but seem overvalued after today's report. 

Growth stocks you can count on
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2845080, ~/Articles/ArticleHandler.aspx, 9/2/2015 5:55:14 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Jeremy Bowman

Fool since 2011. I write about consumer goods, the big picture, and whatever else piques my interest. Follow me on Twitter to see my latest articles, and for commentary on hot topics in retail and the broad market.

Today's Market

updated Moments ago Sponsored by:
DOW 16,351.38 293.03 1.82%
S&P 500 1,948.86 35.01 1.83%
NASD 4,749.98 113.87 2.46%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/2/2015 4:00 PM
PBPB $10.20 Down -0.06 -0.58%
Potbelly Corporati… CAPS Rating: **