Potbelly (PBPB) IPO Sends Shares Soaring

Joel Anderson |

Shares in sandwich maker Potbelly ($PBPB) soared in its first day of trading, welcoming the company to the street with a nearly 125 percent pop. The offering, led by Bank of American (BAC) and Goldman Sachs (GS) , priced shares at $14. This was higher than expected, but still proved to be too low as the stock took off as soon as trading began.

Investors Feast on Potbelly

Potbelly brought an attractive series of fundamentals to the table that clearly piqued interest for investors. Potbelly featured 286 locations in 18 states as of June 30, and expressed plans to increase the number of stores by 10 percent annually. What’s more, Potbelly saw last year’s revenue reach $274.9 million, a year-over-year increase of 16 percent. With average revenue growth over the last 5 years at 14 percent annually, Potbelly is well ahead of the industry average of between 2 and 3 percent.

Some see Potbelly’s prices, between $5 and $8 a sandwich, as making it very competitive in the market for people’s lunch dollars.



"The price of a meal at Potbelly is competitive," said Joe Pawlak, vice president of restaurant consultants Technomic. "Since Potbelly does not have table service, customers can save a few dollars not having to tip while also enjoying a sit-down experience. Potbelly is in the sweet spot of quick casual restaurants."

Pawlak continued, citing a warm atmosphere as well: "You don't mind staying and eating at Potbelly, unlike other sandwich shops," Pawlak said. "Also, the quality is as good or better than other casual restaurants."

 The IPO sold some 7.5 million shares at $14 apiece, up from the $12 to $13 a share the company had initially predicted, raising $105 million for the growing eatery.

Restaurant Chains a Popular Wall Street Play

Potbelly represents another in a line of eatery stocks that have been showing strong gains of late. Noodles & Co. (NDLS) had its IPO in June and is up almost 19 percent since that date. Mexican-inspired restraunts Chuy’s (CHUY) and Chipotle Mexican Grill (CMG) have posted strong gains this year, up 70 percent and 45 percent respectively since the start of 2013. 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
CMG Chipotle Mexican Grill Inc. 281.27 1.76 0.63 598,560 Trade
NDLS Noodles & Company 5.10 -0.10 -1.92 216,848 Trade
GS The Goldman Sachs Group Inc. 236.43 -1.59 -0.67 2,177,237 Trade
BAC Bank of America Corporation 26.66 -0.07 -0.26 38,103,201 Trade
PBPB Potbelly Corporation 12.05 -0.10 -0.82 163,311 Trade
CHUY Chuy\'s Holdings Inc. 23.45 -0.65 -2.70 133,276 Trade
AISLF Asia Satl Tlcmm Hldgs Ord 0.91 0.00 0.00 0

Comments

Emerging Growth

Valuesetters Inc

Valuesetters Inc is a next generation technology company. The Company is focused in providing technologies and infrastructure-as-a-service (Iaas) to consumer through enterprise communications, entertainment, and game platforms.

Private Markets

Voleo

Voleo is a free download that allows you to form investment clubs with your friends, family, colleagues, classmates, teammates…basically anyone you know and trust. Invest and manage a stock portfolio…

iPRO Network, LLC

We provide the platform, tools, and resources to empower individuals and professionals to market desirable goods and services to the public, taking the place of traditional methods of commerce.