Potbelly (NASDAQ:PBPB) delivers shareholders solid 24% CAGR over 5 years, surging 16% in the last week alone
Potbelly Corporation (NASDAQ:PBPB) has delivered a solid 24% compound annual growth rate (CAGR) over the past five years, with a remarkable 16% surge in the last week alone. The stock has increased by 195% over five years and 26% in the last quarter. Recent financial results indicate a shift from losses to profitability, contributing to positive investor sentiment. Shareholders have seen a total return of 67% over the past year, suggesting improving business conditions. However, potential risks remain, with one warning sign identified for the company.
Explore Potbelly's Fair Values from the Community and select yours
When you buy shares in a company, it's worth keeping in mind the possibility that it could fail, and you could lose your money. But when you pick a company that is really flourishing, you can make more than 100%. For instance, the price of Potbelly Corporation (NASDAQ:PBPB) stock is up an impressive 195% over the last five years. It's also good to see the share price up 26% over the last quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report.
The past week has proven to be lucrative for Potbelly investors, so let's see if fundamentals drove the company's five-year performance.
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To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
During the five years of share price growth, Potbelly moved from a loss to profitability. Sometimes, the start of profitability is a major inflection point that can signal fast earnings growth to come, which in turn justifies very strong share price gains.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..
A Different Perspective
It's nice to see that Potbelly shareholders have received a total shareholder return of 67% over the last year. That gain is better than the annual TSR over five years, which is 24%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Potbelly you should know about.
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Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
