Share price of Potbelly Corporation (PBPB) tumbled 25.0% on Jul 10, 2014 after the company announced disappointing preliminary results for the second quarter of 2014 and significantly lowered its outlook for 2014. The outlook also fell significantly short of analysts’ expectations. This sandwich maker will release its second quarter earnings on Aug 5, 2014.
Potbelly expects revenues of approximately $83.6 million in the second quarter, up 6.9% year over year. The projected figure falls short of the Zacks Consensus Estimate of 87.0 million by 3.9%. Comps are expected to decline 1.6% against an increase of 3.0% in the year-ago period due to sluggish traffic. This is the second consecutive quarter of decline in comps. Comps declined 2.2% in the first quarter of the year.
Meanwhile, the company expects adjusted earnings per share of 6 cents that also falls short of the Zacks Consensus Estimate of 12 cents. Importantly, the company’s preliminary second quarter numbers fell short of its own expectation. The weak results reflect higher advertising expense and public company related expenses.
Potbelly expects 2014 adjusted earnings per share in the range of 18 cents to 21 cents. The range represents a significant year-over-year decline, comparing unfavorably with the previous expectation of an increase of 25.0% to 35.0%. The current guidance also falls short of the Zacks Consensus Estimate of 34 cents per share.
Moreover, the company expects flat to low single-digit decline in comps, much lower than the previous guidance of low single-digit company-operated comparable store sales growth for fiscal 2014.
Potbelly Corporation presently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include BJ's Restaurants, Inc. (BJRI), Brinker International, Inc. (EAT) and Chipotle Mexican Grill, Inc. (CMG). All these stocks carry a Zacks Rank #2 (Buy).
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