Potbelly (PBPB) Q4 Earnings: What's in the Cards this Time?

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Potbelly CorporationPBPB is set to report fourth-quarter and full-year 2016 results on Feb 14, after the market closes .

Last quarter, the company posted an earnings surprise of 20%. In fact, the Chicago-based casual-dining restaurant's earnings outpaced/met the Zacks Consensus Estimate in all of the trailing four quarters, with an average beat of 19.58%.

Let's see how things are shaping up for this announcement.

Potbelly Corporation Price and EPS Surprise

Potbelly Corporation Price and EPS Surprise | Potbelly Corporation Quote

Factors to Consider

Potbelly has been reporting positive comps over the past few quarters and we expect the trend to continue in the to-be-reported quarter as well. The company continues to develop a pipeline that will complement its core menu, while maintaining its operational efficiency. Further, it has been using catering coordinators to manage its back-line operations and to canvas business outside to drive sales. Potbelly's investment in technology like its new app, which will be in beta test from the beginning of the fourth quarter, is also expected to boost growth of its business.

However, increased labor expenses due to minimum wage increases across some of the markets in which Potbelly operates, might prove to be a headwind. Additionally, the company's rising cost structure is likely to hurt margins in the fourth quarter.

Moreover, in the third quarter conference call, Potbelly mentioned persistent consumer headwinds that have impacted the broader restaurant industry. Also, the company observed declined traffic in the third quarter and the trend is expected to continue in the fourth quarter too, which could put pressure on the top line.

Earnings Whispers

Our proven model does not conclusively show that Potbelly is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as elaborated below.

Zacks ESP: Potbelly's Earnings ESP is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate is pegged at 6 cents per share. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Potbelly has a Zacks Rank #4 (Sell).

Please note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies in the broader Retail-Wholesale sector to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Carrols Restaurant Group, Inc. TAST has an Earnings ESP of +16.67% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

Papa John's International, Inc. PZZA has an Earnings ESP of +4.55% and a Zacks Rank #2.

SpartanNash Company SPTN has an Earnings ESP of +2.04% and a Zacks Rank #2.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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