Potbelly Gains 14% in 3 Months: Is There More Upside for the Stock?

Potbelly Corporation PBPB shares have risen 13.8% in the past three months against the industry’s decline of 1%. The stock has also outpaced the S&P 500’s growth of 5.8%. The company has been benefiting from its 5-pillar strategic plan, robust digitalization and expansion initiatives.On Tuesday, the stock closed at $9.40, 34.5% below its 52-week high but 49.7% above its 52-week low. In the past three months, PBPB outperformed industry players like Chipotle Mexican Grill, Inc.’s CMG 5.6% rise, Restaurant Brands International Inc.’s QSR 6% dip and El Pollo Loco Holdings, Inc.’s LOCO 12.9% decline. Image Source: Zacks Investment Research Decoding Tailwinds Behind PBPB’s RallyPotbelly is benefiting from the five-pillar strategy. PBPB's five-pillar strategy focuses on driving same-store sales growth, expanding its footprint through franchising, enhancing digital capabilities, optimizing operations for efficiency and strengthening brand loyalty. By prioritizing menu innovation, leveraging technology for convenience and fostering franchise partnerships, Potbelly aims to boost profitability while scaling its presence across key markets.The introduction of popular menu items like the farmhouse chicken sandwich, blueberry muffin cookie and other innovative offerings continues to bolster customer satisfaction and brand perception. Enhancements to the core menu, such as new sauces and toppings, along with innovative beverage offerings, are broadening customer appeal.In third-quarter fiscal 2024, digital sales accounted for more than 38% of shop sales, with increased customer engagement through the Perks loyalty program, which saw frequency growth across all customer cohorts. Potbelly has been consistently shifting its digital mix toward company-owned channels, a trend that continued in the fiscal third quarter, contributing 100 basis points to the year-over-year improvement in its digital mix.Expansion efforts are also aiding the company. The company opened eight shops in third-quarter fiscal 2024, leading to 15 for the year. The development pipeline remains strong, with expectations of 24-26 openings for 2024.The Potbelly Perks loyalty program is a key growth driver and central element of the company’s digital strategy. In the quarter, all customer frequency cohorts within the Perks program showed increased engagement, highlighting the effectiveness of the company’s digital initiatives and promotional efforts. By enabling members to redeem coins for rewards, the program continues to deliver value and strengthen customer loyalty. Overall, Potbelly’s focus on executing its digital strategy is a critical pillar of its growth.Estimate Revision Favors PBPB StockIndicating the positive sentiment around PBPB, the Zacks Consensus Estimate for earnings per share has seen upward revisions. In the past 60 days, analysts have raised their estimates for the current and the next fiscal years by 5% to 21 cents and 4.2% to 25 cents per share, respectively.ConclusionPotbelly is on a strong growth trajectory, driven by its initiatives on same-store sales growth, digital expansion, franchising and customer engagement through innovative offerings and loyalty programs. The company’s ability to introduce appealing menu items, enhance its digital channels, and expand its footprint has bolstered its competitive position and customer satisfaction. With a solid pipeline of store openings and a loyalty program that continues to drive frequency and value, Potbelly has a clear focus on long-term profitability and market expansion.These factors, combined with positive sentiment from analysts, make PBPB an attractive investment opportunity for growth-focused investors. PBPB currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Free: 5 Stocks to Buy As Infrastructure Spending SoarsTrillions of dollars in Federal funds have been earmarked to repair and upgrade America’s infrastructure. In addition to roads and bridges, this flood of cash will pour into AI data centers, renewable energy sources and more.In, you’ll discover 5 surprising stocks positioned to profit the most from the spending spree that’s just getting started in this space.Download How to Profit from the Trillion-Dollar Infrastructure Boom absolutely free today.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 Chipotle Mexican Grill, Inc. (CMG): Free Stock Analysis Report Potbelly Corporation (PBPB): Free Stock Analysis Report El Pollo Loco Holdings, Inc. (LOCO): Free Stock Analysis Report Restaurant Brands International Inc. (QSR): 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