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Bear of the Day: Potbelly's (PBPB)

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I remember the good old days of the “Sandwich Wars.” Everywhere you looked, new, delicious sandwich shops were opening up to challenge a space formerly dominated by Subway. Fresh names like Quizno’s and Jersey Mike’s popped up, giving lunch-time folks on a time crunch plenty of choices. One of these sandwich shops is today’s Bear of the Day. Not because I think it’s in danger of going the way of Quizno’s, just because its earnings trend has taken a turn for the negative.

I’m talking about Zacks Rank #5 (Strong Sell) Potbelly’s (PBPB - Free Report) . Potbelly Corporation, through its subsidiaries, owns, operates, and franchises Potbelly Sandwich Works sandwich shops in the United States. The company offers toasty warm sandwiches, salads, soups, chili, sides, desserts, breakfast sandwiches, and steel cut oatmeal. As of February 25, 2019, the company operated approximately 400 shops in the United States; and approximately 50 franchisees operated shops in the United States, the Middle East, Canada, and India. 

The reason for the unfavorable Zacks Rank stems from a series of earnings estimate revisions to the downside coming from analysts. Over the last thirty days, three analysts have cut their earnings estimate for the company’s current year and next year. The bearish sentiment has smashed the current year Zacks Consensus Estimate down from 29 cents to a 3-cent loss. Next year’s number has come down from 33 cents to only 15 cents.

It’s not just sandwich shops coming under pressure in this market. The Retail – Restaurants industry ranks in the Bottom 28% of our Zacks Industry Rank. There are a handful of stocks within this industry which are in good graces of the Zacks Rank. Among those are Zacks Rank #1 (Strong Buy) Noodles & Co (NDLS - Free Report) as well as Zacks Rank #2 (Buy) Chipotle Mexican Grill (CMG - Free Report) .

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