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 up more than 12% as of 1:30 p.m. Wednesday after the sandwich shop chain reported strong fourth-quarter earnings.
So what: Total quarterly revenue rose by 13.4% year over year, driven by the opening of 19 new shops and a 3.7% comparable-store sales increase. For the full year, revenue rose 9.2%, 46 new shops opened, and comparable-store sales rose by 0.1%. Analysts had expected slightly lower revenue.
Potbelly for the fourth quarter posted $0.7 million in generally accepted accounting principles net income, compared to a loss of $3.7 million during the fourth quarter of 2013. Non-GAAP earnings per share came in at $0.06, $0.03 higher than analysts expected.
Now what: The company said it would open 48 to 55 new shops during 2015, growing from a base of slightly over 300 existing locations. Potbelly guided for low single-digit comparable-store sales growth, along with continued double-digit revenue growth.
Potbelly stock has tumbled since the company's IPO in late 2013. After reaching a high of about $32 per share, the stock now trades at just half that value. Shares of Potbelly now go for about 1.4 times sales, significantly lower than similarly sized restaurant chains.
While fast-growing restaurant concepts always carry the risk of petering out early, Potbelly is one of the more reasonably priced options, deserving a deeper look from investors.