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El Pollo LoCo (LOCO)
NASDAQ:LOCO
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El Pollo LoCo
(NASDAQ:LOCO)
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Rating:70Outperform
Price Target:
$11.50
▲(22.34% Upside)
El Pollo Loco's overall stock score is driven by stable financial performance and reasonable valuation. While technical analysis shows no strong momentum, the earnings call provides a cautiously optimistic outlook. Key risks include revenue volatility and macroeconomic challenges.
Positive Factors
Revenue Growth
The year-over-year revenue growth indicates strong demand and effective business strategies, supporting long-term financial stability and expansion.
Digital Business Expansion
The significant growth in digital sales reflects successful adaptation to consumer trends, enhancing customer engagement and operational efficiency.
Menu Innovation
Strategic menu innovation attracts diverse customer segments and strengthens brand loyalty, supporting sustained competitive advantage.
Negative Factors
Revenue Volatility
Volatile revenue growth can challenge financial planning and investor confidence, potentially impacting long-term strategic initiatives.
Increasing Expenses
Rising expenses can pressure profit margins and limit reinvestment capabilities, hindering long-term growth and operational efficiency.
Challenging Macro Environment
Macroeconomic challenges can impact consumer spending and demand, posing risks to revenue stability and growth prospects.
El Pollo LoCo (LOCO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$276.56M
Dividend YieldN/A
Average Volume (3M)211.49K
Price to Earnings (P/E)11.2
Beta (1Y)1.06
Revenue Growth1.85%
EPS Growth-0.99%
CountryUS
Employees4,000
SectorConsumer Cyclical
Sector Strength84
IndustryRestaurants
Share Statistics
EPS (TTM)0.28
Shares Outstanding29,995,453
10 Day Avg. Volume235,758
30 Day Avg. Volume211,491
Financial Highlights & Ratios
PEG Ratio0.94
Price to Book (P/B)1.35
Price to Sales (P/S)0.75
P/FCF Ratio12.73
Enterprise Value/Market Cap2.05
Enterprise Value/Revenue1.18
Enterprise Value/Gross Profit5.96
Enterprise Value/Ebitda10.23
Forecast
1Y Price Target
$14.50Price Target Upside54.26% Upside
Rating ConsensusHold
Number of Analyst Covering4
El Pollo LoCo Business Overview & Revenue Model
Company DescriptionEl Pollo Loco Holdings, Inc., through its subsidiary, El Pollo Loco, Inc., develops, franchises, licenses, and operates quick-service restaurants under the El Pollo Loco name. As of May 04, 2022, the company operated 480 restaurants comprising 189 company-operated and 291 franchised restaurants located in California, Nevada, Arizona, Texas, Utah, and Louisiana. It also licenses one restaurant in the Philippines. The company was formerly known as Chicken Acquisition Corp. and changed its name to El Pollo Loco Holdings, Inc. in April 2014. El Pollo Loco Holdings, Inc. was founded in 1975 and is headquartered in Costa Mesa, California.
How the Company Makes MoneyEl Pollo Loco generates revenue primarily through the sale of its food and beverage offerings at its company-owned and franchised locations. The chain employs a revenue model based on high-volume sales and a diverse menu that attracts various customer segments. Key revenue streams include dine-in, take-out, and drive-thru orders, supplemented by online ordering and delivery services. Additionally, the company benefits from franchise fees and royalties from franchised locations, creating a stable income source. El Pollo Loco also engages in marketing partnerships and promotions that enhance brand visibility and drive customer traffic, contributing to its overall earnings.
El Pollo LoCo Earnings Call Summary
Earnings Call Date:Jul 31, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 30, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted several positive developments, including revenue growth, menu innovations, and increased digital sales. However, these positives were tempered by a challenging macroeconomic environment, increased expenses, and slightly negative sales performance. While there is optimism about future growth, current conditions remain mixed.Q2-2025 Updates
Positive Updates
Revenue Growth
Total revenue increased to $125.8 million compared to $122.2 million in the second quarter of 2024, a year-over-year growth driven by a 2% increase in company-operated restaurant revenue.
Positive System-Wide Traffic Growth
Despite slightly negative sales performance, there was a return to positive system-wide traffic growth, reflecting a careful balance of innovation and value.
Menu Innovation Success
Introduction of new products such as Fresca Wraps and Salads, and premium chicken quesadillas, which received positive guest feedback and demonstrated strategic menu innovation.
Digital Business Growth
Digital business, including kiosks, grew to 25.5% of sales compared to 17.1% in the second quarter of last year.
Margin Expansion
Restaurant level operating profit margins improved to 19.1% from 18.6% year-over-year, with ongoing improvements in labor productivity and methodical cost savings.
Franchise Traffic Growth
Franchise traffic growth accelerated with traffic up 1.5% in the second quarter for the franchise system.
Unit Growth
Opening of new franchise-operated restaurants and plans to open at least 10 new restaurants in 2025, with opportunities to almost double that pace in 2026.
Negative Updates
Negative Sales Performance
Ended the quarter with slightly negative sales performance despite positive traffic growth.
Franchise Comparable Sales Decline
Franchise comparable restaurant sales decreased by 1.1% despite positive franchise traffic growth.
Challenging Macro Environment
Continued macroeconomic headwinds affecting consumer behavior, with pronounced effects at the end of the month and during value-conscious times.
Occupancy and Operating Expenses Increase
Occupancy and other operating expenses as a percentage of company restaurant sales increased by 150 basis points year-over-year.
General and Administrative Expenses Rise
G&A expenses increased by 120 basis points year-over-year due to stock compensation, special legal fees, and restructuring costs.
Company Guidance
During the El Pollo Loco Second Quarter 2025 Earnings Conference Call, guidance was provided on several key metrics. The company reported a total revenue of $125.8 million, with company-operated restaurant revenue increasing by 2% to $104.3 million. The franchise revenue saw a significant rise of 14.8% to $13.4 million. The company expects full-year restaurant contribution margins to range between 17.25% and 17.75%. For the third quarter to date, system-wide comparable store sales decreased by 0.7%, with a 0.6% increase in company-operated restaurants and a 1.4% decrease in franchise restaurants. The brand's digital business, inclusive of kiosks, grew to represent 25.5% of sales. Looking ahead, El Pollo Loco plans to open 10–11 new restaurants in 2025, with capital expenditures projected at $31–34 million and G&A expenses of $48–51 million. The company also anticipates a commodity inflation range of 0.5% to 1.5% for the full year, with wage inflation expected between 3% and 4% for company-owned locations.El Pollo LoCo Financial Statement Overview
Summary
El Pollo Loco demonstrates stable financial performance with consistent profitability and efficient operations. Healthy margins are present, but volatility in revenue growth and declining free cash flow growth are concerns. The balance sheet is solid, but reducing debt could enhance financial stability.Income Statement
El Pollo LoCo's income statement shows a stable performance with a consistent gross profit margin around 20% and a net profit margin above 5% in TTM. However, the revenue growth rate has been volatile, with a significant drop in TTM compared to the previous year. EBIT and EBITDA margins remain healthy, indicating efficient operations despite the competitive restaurant industry.75
Positive
Balance Sheet
The balance sheet reflects a moderate debt-to-equity ratio, which has slightly improved in TTM, indicating a balanced approach to leveraging. Return on equity is stable, suggesting effective use of equity to generate profits. The equity ratio is reasonable, showing a solid asset base, although there is room for improvement in reducing debt levels.70
Positive
Cash Flow
Cash flow analysis reveals a decline in free cash flow growth in TTM, which could be a concern if it continues. The operating cash flow to net income ratio is below 1, indicating less cash generation relative to net income. However, the free cash flow to net income ratio remains above 0.5, suggesting some level of cash profitability.65
Positive
| Breakdown | TTM | Dec 2024 | Dec 2024 | Dec 2023 | Dec 2023 | Dec 2022 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 479.69M | 473.01M | 473.01M | 468.66M | 468.66M | 469.96M |
| Gross Profit | 94.98M | 103.52M | 103.52M | 93.37M | 93.37M | 83.70M |
| EBITDA | 55.28M | 56.91M | 56.91M | 55.09M | 55.09M | 44.51M |
| Net Income | 24.73M | 25.68M | 25.68M | 25.55M | 25.55M | 20.80M |
Balance Sheet | ||||||
| Total Assets | 596.78M | 592.01M | 592.01M | 592.30M | 592.30M | 597.22M |
| Cash, Cash Equivalents and Short-Term Investments | 8.99M | 2.48M | 2.48M | 7.29M | 7.29M | 20.49M |
| Total Debt | 258.32M | 263.02M | 263.02M | 273.33M | 273.33M | 252.88M |
| Total Liabilities | 322.60M | 331.35M | 331.35M | 341.61M | 341.61M | 316.07M |
| Stockholders Equity | 274.18M | 260.67M | 260.67M | 250.70M | 250.70M | 281.15M |
Cash Flow | ||||||
| Free Cash Flow | 20.71M | 27.70M | 27.70M | 19.36M | 19.36M | 18.63M |
| Operating Cash Flow | 37.54M | 46.78M | 46.78M | 40.69M | 40.69M | 38.55M |
| Investing Cash Flow | -16.82M | -18.94M | -18.94M | -13.45M | -13.45M | -18.91M |
| Financing Cash Flow | -22.19M | -32.65M | -32.65M | -40.45M | -40.45M | -29.19M |
El Pollo LoCo Technical Analysis
Negative
9.40
Price Trends
10.05
Negative
10.39
Negative
10.49
Negative
Market Momentum
-0.21
Negative
42.58
Neutral
30.39
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LOCO, the sentiment is Negative. The current price of 9.4 is below the 20-day moving average (MA) of 9.57, below the 50-day MA of 10.05, and below the 200-day MA of 10.49, indicating a bearish trend. The MACD of -0.21 indicates Negative momentum. The RSI at 42.58 is Neutral, neither overbought nor oversold. The STOCH value of 30.39 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LOCO.
El Pollo LoCo Risk Analysis
El Pollo LoCo disclosed 35 risk factors in its most recent earnings report. El Pollo LoCo reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
El Pollo LoCo Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | $276.56M | 11.16 | 9.46% | ― | 1.85% | -0.99% | |
68 Neutral | $2.70B | 16.70 | 41.01% | 2.00% | 4.77% | 38.24% | |
68 Neutral | $517.76M | 48.06 | 19.65% | ― | -1.72% | -70.31% | |
65 Neutral | $1.74B | 23.37 | -20.16% | 3.54% | -1.46% | 8.10% | |
63 Neutral | $1.69B | 9.26 | 99.35% | 8.78% | 1.31% | -1.46% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
50 Neutral | $332.52M | ― | 4.15% | 10.31% | -6.66% | -71.87% |
* Consumer Cyclical Sector Average
LOCO
El Pollo LoCo
9.40
-3.51
-27.19%
JACK
Jack In The Box
17.06
-27.36
-61.59%
PZZA
Papa John's International
52.01
-0.16
-0.31%
CAKE
Cheesecake Factory
53.97
12.38
29.77%
WEN
Wendy's
8.88
-9.34
-51.26%
PBPB
Potbelly
17.11
8.65
102.25%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.