Potbelly (PBPB) Q3 Earnings: Is A Disappointment In Store?
Zacks Investment Research | Nov 01, 2017 10:30PM ET
Potbelly Corporation (NASDAQ:PBPB) is set to report third-quarter 2017 results on Nov 3, before market opens.
Last quarter, the company missed the Zacks Consensus Estimate for earnings by 8.33%. Prior to that, this Chicago-based casual-dining restaurant’s earnings surpassed the consensus estimate in three straight quarters, with an average beat of 37.74%.
Notably, Potbelly has been plagued by a challenging operating environment in the U.S. restaurants space, which led to lower comps in the first half of 2017. In fact, this difficult industry backdrop has persisted owing to weak consumer demand coupled with food inflation. This is anticipated to dent results in the third quarter.
In fact, the consensus estimate for comps decline for the third quarter is pegged at 4.8%. Comps had declined 4.9% in the last reported quarter.
To boost the top line, the company has been undertaking various initiatives. Apart from focusing on improved digital innovation and distinguished menu offerings, the company is focused on strengthening its brand name through various advertising strategies.
In fact, in the third quarter, the company initiated television advertising which is expected to drive traffic and thereby boost sales. Additionally, the company’s continual expansion plan are expected to boost sales in the to-be-reported quarter as well.
Notably, the consensus estimate for revenues is pegged at $106.7 million, reflecting year-over-year growth of 2.8%.
However, despite cost-saving efforts, increased labor expenses due to minimum wage increases across some of the markets in which the company operates might hamper the quarter’s profitability.
Notably, the consensus estimate for third-quarter adjusted earnings is pegged at 6 cents, reflecting a year-over-year decline of 47.9%.
Moreover, a 25% decline in third-quarter earnings estimates over the past two months reflects analysts’ pessimism over the stock.
Also, per our predictive quantitative model, Potbelly does not have the right combination of two main ingredients — a positive Zacks Investment Research
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