Potbelly and Lovesac have been highlighted as Zacks Bull and Bear of the Day

For Immediate ReleaseChicago, IL – February 5, 2025 – Zacks Equity Research shares Potbelly PBPB as the Bull of the Day and Lovesac LOVE as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Costco Wholesale Corp. COST, Dollar General Corp. DG and Target Corp. TGT.Here is a synopsis of all five stocks.Bull of the Day:Potbelly is a Zack Rank #1 (Strong Buy) that is a fast-casual restaurant chain known for its toasted sandwiches, soups, salads, and hand-dipped milkshakes.The stock has made significant strides since its COVID lows, with earnings momentum on the rise since the pandemic. Now, as it approaches levels not seen since 2018, is it time to dive in and grab some shares?About the CompanyPotbelly is valued at approximately $350 million and employs 5,000 people.The company started as an antique store in Chicago in 1977 before transitioning into a sandwich shop. Potbelly now operates both company-owned and franchised locations across the U.S., emphasizing a warm, neighborhood-friendly atmosphere with live music in some stores.The stock has a Zacks Style Score of “B” in Growth and “A” in Momentum. The stock has “C” in Value, with a Forward PE at 45.Q4 Earnings BeatPotbelly's Q4 results came in stronger than expected, with a 60% earnings surprise to the upside. The company posted same-store sales (SSS) growth of 0.2-0.3% year-over-year, outperforming the company’s prior guidance of a decline between -2.5% and -0.5%.Adjusted EBITDA for the quarter also exceeded expectations, reaching $8.0-8.4 million versus the guided range of $7.0-8.0 million.Potbelly remains focused on accelerating expansion, with 38 new shop locations already in development for 2025 and an additional 30 new franchise commitments secured in Q4, bringing total open and committed locations to 727.While unit growth came in slightly below target for Q4, the company’s ability to manage costs effectively and drive profitability suggests a strong foundation for future growth. With adjusted EBITDA projected to increase by approximately 10% for the full year, management remains confident in its long-term strategy. If Potbelly can sustain its momentum in sales growth while executing on its expansion plans, 2025 could mark an inflection point for the brand.The earnings improvement reflects the success of Potbelly’s product innovation, digital marketing efforts, and operational efficiency, which helped drive positive comps and expand restaurant margins.Estimates Headed HigherSince earnings, analysts have been lifting estimates and price targets.For the current quarter, earnings estimates went from $0.04 to $0.06, up 50%.For the current year, estimates also improved 14%, going from $0.21 to $0.24.For the next year, analysts now see $0.27, which is up from the $0.24 expected just 90 days ago.The Technical TakeThe stock struggled since before COVID, falling to new lows in 2019 and being left for dead during the height of the pandemic. A low of $1.50 was the bottom in 2020, and since then it has been a slow climb.Now the stock is back to its 2018 levels, with investors looking to challenge the 20214 highs. A break above $14, could help the stock trend to the $17 area, about 35% higher from current trading levels.The stock is up over 30% already this year, so interested buyers can target the moving averages below.21-day: $1150-day: $10.30200-day: $8.802025 Fibonacci buy zone (50%-61.8% retracements): $10.30-11In SummaryWith Potbelly delivering strong earnings, upward estimate revisions, and a solid technical setup, the stock appears well-positioned for further gains. While valuation remains a consideration, the company’s growth momentum, expanding footprint, and improving profitability provide a compelling case for long-term investors.A breakout above key resistance levels could fuel additional upside, with technical targets pointing toward the mid-teens. For those looking to take a bite, keeping an eye on pullbacks to key moving averages may offer strategic entry points.Bear of the Day:Lovesac is a Zacks Rank #5 (Strong Sell) that is a furniture company best known for its modular seating system called Sactionals and its large beanbag-style chairs called Sacs.The company emphasizes sustainability, with many products made from recycled materials.Despite the niche that the company has, the numbers have been coming up short. Recent earnings brought heavy selling into the name and with analyst lowering estimates, investors might want to sit this one out.About the CompanyLovesac was founded in 1995 and is based in Stamford, Connecticut.The company operates a direct-to-consumer model, selling through its website, showrooms, and some retail partners. It has a premium positioning, targeting customers who want high-quality, adaptable furniture.LOVE is valued at $380 million and has a Forward PE of 25. The stock holds Zacks Style Scores of “D” in Value and Momentum. It also has an “F” in Growth.Q3 EarningsIn December, Lovesac reported Q3 earnings that missed expectations, posting a net loss of $0.32 per share versus the expected $0.15 loss, and $150 million in revenue, slightly below last year's $154 million.The company lowered its Q4 guidance to $1.67-$2.14 EPS (vs. $2.36 estimate) and $221-241 million in revenue (vs. $263 million estimate).For FY25, Lovesac revised its guidance to $0.27-$0.74 EPS (vs. $1.09 estimate) and $660-$680 million in revenue (vs. $707 million estimate).Despite these weaker results, the company grew its showroom count to 258 locations (vs. 230 y/y) and gained market share in a category facing challenges.CEO remarks highlighted continued innovation and a strong product pipeline, including the Sactionals recliner and Any Table, both of which contributed to market share gains. Lovesac ended Q3 with $61.7 million in cash and no debt, positioning it for future investments and share buybacks. The company is confident in its long-term prospects, with plans to share a detailed strategic roadmap at an upcoming investor day.The optimism did not convince investors, as the stock fell over 25% on the earnings news.Annual ICR Conference 2025At the 27th Annual ICR Conference 2025, Lovesac reported lower conversion rates during the holiday season, impacted by shorter shipping timelines and heightened competitor promotions.Despite challenges, it saw double-digit growth in its quote pipeline during Black Friday and maintained 30% promotional discounts to protect brand value and margins. Lovesac is focusing on aggressive strategies to convert its pipeline and enhance customer engagement through improved CRM capabilities, staying optimistic about growth through product innovation and market expansion.While the company seems motivated, analysts and investors want more proof.Earnings Estimates FallingBig drop in estimates after the guidance back in December.For the current quarter, forecasts have dropped 24% over the past 60 days, from $2.36 to $1.80.Looking at the current year, estimates have declined 64% in that same period, down from $1.09 to $0.39.For the next year, projections have been adjusted downward by 43%, now at $1.77 from $1.01.Technical TakeThe stock looked to be back on track late last year as it went from $22 to $39 in just a matter of months. However, the stock was crushed after earnings and is now trading at $24.There is likely support at the $20 area, but if that area cracks, look out for $15. For the bulls to take back momentum, they need price above the 200-day at $26.60 and the 50-day at $28.80.In SummaryLovesac has positioned itself as an innovative player in the furniture industry, but its recent financial performance and revised guidance have raised significant concerns.With analysts lowering earnings estimates and investor sentiment remaining cautious, Lovesac faces a challenging road ahead.Additional content:Costco at 52-Week High: Buy, Hold or Sell?Costco Wholesale Corp. just hit a fresh 52-week high, rewarding investors with impressive gains. But with the stock soaring, a key question arises — should you cash in now or stay invested? Costco’s strong fundamentals, including strong membership growth and pricing power, have fueled its rise, but is there still room to run? Let’s dive into the key factors driving this rally and whether it’s time to take profits.The stock reached a new 52-week peak of $1,009.61 yesterday, a significant milestone that has caught investors’ attention. Closing at $1,005.83 on Monday, shares of Costco have shown a remarkable run on the bourses, surging 41.4% over the past year. The stock has outpaced the industry and the broader S&P 500 index, which have risen 21.8% and 23.8%, respectively, in the said period.With its market dominance and resilient business model, Costco has long been a favorite among investors seeking stable growth.Costco Trading Above 50 & 200-Day Moving AveragesTechnical indicators support Costco’s strong performance. The stock currently trades above its 50-day and 200-day moving averages, signaling robust upward momentum and price stability. This technical strength reflects positive market sentiment and growing confidence in COST’s prospects.Costco's Membership Base & Pricing Power: Key DriversCostco’s membership-based business model ensures a steady revenue stream. The retailer's ability to grow its membership base is a key factor behind its continued success. Costco has seen impressive membership renewal rates, often exceeding 90% in the United States and Canada. The renewal rates are a testament to Costco’s ability to retain its customers, driven by a combination of competitive pricing and quality products.The company's ability to offer high-quality products at low prices has allowed it to capture market share. Moreover, Costco’s private-label brand, Kirkland Signature, has been a major driver of consumer loyalty and repeat business. As a result, Costco has consistently registered comparable sales growth. The metric rose 7.4% in December. This follows consecutive increases of 3.1% and 5.1% in November and October, respectively.Costco’s cost-efficient operations are a significant contributor to its profitability. The company’s ability to maintain low operating costs while delivering high-quality goods allows it to operate on thin margins but on greater volume. Moreover, Costco's expansion into international markets is expected to fuel its growth. During the first quarter of fiscal 2025, COST opened six net new warehouses, of which four were outside the United States.While Costco is traditionally known for its brick-and-mortar stores, it has successfully leveraged e-commerce to capture the growing trend of online shopping. Total e-commerce comparable sales grew 13% during the first quarter. This growth was largely driven by Costco Logistics, the company’s platform that specializes in large, bulky items such as appliances and furniture. Costco Logistics made nearly 1 million deliveries in the first quarter. The company’s U.S. app was downloaded 2.9 million times in the quarter, bringing total downloads to approximately 42 million. Costco Next, a curated online marketplace for exclusive products, achieved record sales during Thanksgiving and Cyber Monday.How Do Estimates Measure Up for COST?Reflecting the positive sentiment around Costco, the Zacks Consensus Estimate for earnings per share has seen upward revisions. Over the past 30 days, the consensus estimate for the current and next fiscal years has increased by 5 cents and 1 cent to $18.01 and $19.66 per share, indicating year-over-year growth rates of 11.8% and 9.2%, respectively.See the Zacks Earnings Calendar to stay ahead of market-making news.Valuation Analysis: Is Costco’s Premium Price Justified?Costco’s stock is trading at a significant premium to its industry peers, such as Dollar General Corp. and Target Corp. Costco's forward 12-month price-to-earnings ratio stands at 53.73, higher than the industry’s ratio of 33.94 and the S&P 500's ratio of 22.46.Now, the question arises: Is Costco’s current price warranted or overvalued in today’s market?Costco’s premium valuation reflects investor confidence in the company’s ability to deliver consistent growth and maintain its competitive advantage. While the stock’s current price may seem high, its robust business model, strong customer base and reliable revenue streams justify the premium.Should You Buy, Hold or Sell COST?Costco’s impressive run to a 52-week high reflects its strong fundamentals, resilient business model and unwavering consumer loyalty. While the stock trades at a premium, its steady membership growth, pricing power and expanding e-commerce presence justify investor confidence. Given its market dominance and continued operational strength, Costco remains well-positioned for long-term growth. Costco currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.Today you can access their live picks without cost or obligation.See Stocks Free >>Media ContactZacks Investment Research800-767-3771 ext. 9339https://www.zacks.comZacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.Past performance is no guarantee of future results. 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These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index.Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Target Corporation (TGT): Free Stock Analysis Report Dollar General Corporation (DG): Free Stock Analysis Report Costco Wholesale Corporation (COST): Free Stock Analysis Report Potbelly Corporation (PBPB): Free Stock Analysis Report The Lovesac Company (LOVE): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks