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NEW YORK (TheStreet) -- Potbelly (PBPB) - Get Potbelly Corp. Report has been upgraded by TheStreet Ratings from Sell to Hold with a ratings score of C-.  TheStreet Ratings Team has this to say about their recommendation:

"We rate POTBELLY CORP (PBPB) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and poor profit margins."

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Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 9.8%. Since the same quarter one year prior, revenues slightly increased by 8.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • PBPB's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.26, which clearly demonstrates the ability to cover short-term cash needs.
  • Looking at the price performance of PBPB's shares over the past 12 months, there is not much good news to report: the stock is down 36.06%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Hotels, Restaurants & Leisure industry. The net income has decreased by 10.0% when compared to the same quarter one year ago, dropping from $2.16 million to $1.95 million.
  • The gross profit margin for POTBELLY CORP is currently lower than what is desirable, coming in at 33.08%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.29% significantly trails the industry average.
  • You can view the full analysis from the report here: PBPB Ratings Report

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