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Potbelly IPO: Are You Biting?

Todd Bunton

Chicago-based sandwich shop Potbelly will soon be a publicly-traded company. The company announced terms for its IPO on Monday.

Potbelly expects its IPO to be priced between $9-$11 per share, which will raise around $75 million for the company. Most of the proceeds (~$50 million) will be used to pay current investors a previously declared cash dividend. The remainder will be used for working capital.

Its shares will trade on the NASDAQ under the uninspiring symbol "PBPB".

Potbelly currently has 295 restaurants (only 7 of which are francished) in 18 states and the District of Columbia. It also has 12 franchised locations in the Middle East. It plans to open 32-35 company-owned locations this year along with 10 franchised locations. Over the long term, it plans to grow the number of restaurants at least 10% annually.

The company has seen steady sales growth over the last few years, as you can see here:

2010: $220.6m
2011: $237.9m
2012: $274.9m
2013: $146.9m (through the first half)

Potbelly is profitable too. It reported net income of $24 million in 2012, up from $7.2 million the year earlier. This corresponds with a profit margin of almost 9%.

With just a little over 28 million shares to be outstanding after the offering, its market cap would be between $252 and $308 million. That's just 10.5 to 12.8x last year's earnings. My guess is that the stock won't stay between $9 and $11 per share for very long.

See the S-1 filing here.

So will you be investing in Potbelly (:PBPB) once it goes public? Or will you be staying away? Chime in below.

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