By Alysha Khan
Potbelly Corp. stock jumped 12.85 percent to $16 – the highest since June – after the company swung to a profit for the fourth quarter, beating analyst expectations.
Sharon Zackfia, equity research analyst at William Blair, maintained an outperform rating for the stock, stating in a research note that the company “still represents a near 40 percent discount to its peer group,” even after the surge in price.
The Chicago-based company earned $0.7 million attributable to common stockholders, or 2 cents per diluted share, in the fourth quarter ended December 28, compared with a loss of $53.5 million, or $1.93 per diluted share, in the year-earlier quarter.
Analysts surveyed by Bloomberg expected an adjusted EPS of 34 cents and Potbelly reported an adjusted EPS of 6 cents, beating the expectations. The restaurant chain adjusted income for the costs of store closures, moving the corporate headquarters, impairment, and the initial public offering in October 2013.
However, analyst expected GAAP 3.5 cents per diluted share and Potbelly’s reported GAAP EPS was 2 cents.
Revenues rose 13.4 percent to $84.8 million from $74.8 million in the year-earlier quarter.
Sales at locations open more than 12 months rose 3.7 percent compared with 0.7 percent in the year-earlier quarter. Zackfia wrote that part of this improvement was driven by a milder winter this year compared with last year.
Comparable-store sales for all of 2014 rose 0.1 percent compared with 1.5 percent in the prior year. Potbelly owns more than 300 locations in the U.S. and its franchisees operate more than 20 in the U.S. and the Middle East. It opened 46 in 2014.
Despite several rocky prior quarters, Charles Talbot, chief financial officer, forecasted continuing growth on a conference call with analysts. For 2015, the chain projected opening 48 to 55 new locations and a low-single-digit comparable stores sales growth.
Talbot argued that the current economic environment was “favorable” to customers.
“Unemployment rates are low,” Talbot said. “Consumer confidence is up and more recently easing gas prices certainly mean more disposable income.”
That disposable income, Talbot said, translates to potentially higher sales. For 2015, the chain forecasted a 20 percent increase in adjusted earnings.
For the full year 2014, Potbelly reported earnings of $4.35 million, or 14 cents per diluted share, compared with a year-prior loss of $63.7 million, or $6.29 per share. Revenue increased to $327 million from $299.7 million.