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El Pollo LoCo (LOCO)
NASDAQ:LOCO
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El Pollo LoCo
(NASDAQ:LOCO)
72Outperform
Positive Factors
Financial Performance
El Pollo Loco reported better-than-expected 4Q24 operating results with stronger restaurant-level margins and sales.
Franchise Interest
There is growing interest from the franchising community in the El Pollo Loco concept due to improvements in the operating model.
Stock Offer
El Pollo Loco's shares surged approximately 5% following an acquisition offer from Biglari Capital.
Negative Factors
Competitive Environment
El Pollo Loco faces an intense competitive environment, which poses a challenge to its market position.
Geographic and Cost Risks
Risks for El Pollo Loco include geographic concentration in L.A., high exposure to chicken costs, and wage inflation pressures.
Growth Challenges
A lack of detail on the acquisition offer makes sustainable EPS growth reliant on expansion, which currently has limited visibility.
El Pollo LoCo (LOCO) vs. S&P 500 (SPY)
Market Cap
$281.04M
Dividend YieldN/A
Average Volume (3M)275.20K
Price to Earnings (P/E)10.9
Beta (1Y)1.12
Revenue Growth0.93%
EPS Growth15.12%
CountryUS
Employees4,143
SectorConsumer Cyclical
Sector Strength66
IndustryRestaurants
Share Statistics
EPS (TTM)0.85
Shares Outstanding30,057,287
10 Day Avg. Volume180,485
30 Day Avg. Volume275,198
Financial Highlights & Ratios
PEG Ratio0.72
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap2.16
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit5.88
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$13.00Price Target Upside39.04% 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 food and beverages in its company-operated and franchised restaurant locations. The company earns money from company-operated restaurants by selling its menu items directly to customers. In addition, El Pollo Loco collects franchise royalties and fees from its franchised locations, which contribute to its overall revenue streams. The company also benefits from strategic partnerships and marketing initiatives that enhance brand visibility and expand its customer base.
El Pollo LoCo Financial Statement Overview
Summary
El Pollo LoCo demonstrates strong financial health across its income statement, balance sheet, and cash flow statement. The company shows steady revenue growth, efficient operations, and a solid balance sheet with manageable debt. Cash flow metrics indicate strong cash generation and effective capital management, supporting future growth initiatives. While profitability metrics are moderate, there is potential for improvement, positioning the company well for sustained financial performance in the competitive restaurant industry.Income Statement
El Pollo LoCo's income statement reveals a stable revenue base with a recent TTM revenue of $473 million, up slightly from the previous annual figure, indicating steady growth. The gross profit margin improved significantly to 38.4% TTM, driven by effective cost management. However, the net profit margin remains moderate at 5.4%, signaling room for profitability enhancement. The EBIT margin of 8.9% TTM and EBITDA margin of 11.6% reflect healthy operational efficiency. Overall, the income statement shows robust performance with potential for further profit optimization.78
Positive
Balance Sheet
El Pollo LoCo's balance sheet is characterized by a solid equity base with a debt-to-equity ratio of 0.27, indicating prudent leverage management. The equity ratio stands at 44.0%, showcasing a strong asset base supported by shareholders' equity. Return on Equity (ROE) is moderate at 9.8%, suggesting reasonable profitability from equity investment. Overall, the balance sheet is stable, with manageable debt levels and a healthy equity position, though there is scope for improving returns on equity.72
Positive
Cash Flow
The cash flow statement highlights a robust cash generation capability, with operating cash flow of $41 million TTM and a free cash flow growth of 37.2% indicating strong cash management. The free cash flow to net income ratio of 1.03 reflects efficient cash utilization. The operating cash flow to net income ratio of 1.60 demonstrates strong cash generation relative to earnings. Overall, the cash flow position is strong, with effective capital allocation strategies supporting growth and operational needs.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 473.01M | 468.66M | 469.96M | 454.36M | 426.09M | Gross Profit |
| 103.52M | 93.37M | 83.70M | 99.27M | 93.67M | EBIT |
| 41.17M | 39.79M | 30.12M | 41.34M | 48.20M | EBITDA |
| 56.91M | 55.09M | 44.51M | 59.92M | 56.24M | Net Income Common Stockholders |
| 25.68M | 25.55M | 20.80M | 29.12M | 24.47M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 2.48M | 7.29M | 20.49M | 30.05M | 13.22M | Total Assets |
| 592.01M | 592.30M | 597.22M | 613.79M | 605.22M | Total Debt |
| 263.02M | 273.33M | 252.88M | 233.47M | 263.13M | Net Debt |
| 260.54M | 266.04M | 232.39M | 203.42M | 249.91M | Total Liabilities |
| 331.35M | 341.61M | 316.07M | 303.16M | 327.64M | Stockholders Equity |
| 260.67M | 250.70M | 281.15M | 310.62M | 277.58M |
| Cash Flow | Free Cash Flow | |||
| 27.70M | 19.36M | 18.63M | 35.06M | 33.86M | Operating Cash Flow |
| 46.78M | 40.69M | 38.55M | 52.10M | 40.55M | Investing Cash Flow |
| -18.94M | -13.45M | -18.91M | -12.48M | -6.69M | Financing Cash Flow |
| -32.65M | -40.45M | -29.19M | -22.79M | -28.71M |
El Pollo LoCo Technical Analysis
Negative
9.35
Price Trends
10.31
Negative
11.10
Negative
11.95
Negative
Market Momentum
-0.27
Negative
39.06
Neutral
18.99
Positive
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 9.35 is below the 20-day moving average (MA) of 9.64, below the 50-day MA of 10.31, and below the 200-day MA of 11.95, indicating a bearish trend. The MACD of -0.27 indicates Negative momentum. The RSI at 39.06 is Neutral, neither overbought nor oversold. The STOCH value of 18.99 is Positive, 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
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $10.64B | 24.75 | 34.69% | 1.52% | 16.01% | 42.54% | |
72 Outperform | $281.04M | 10.94 | 10.05% | ― | 0.93% | 15.12% | |
69 Neutral | $3.52B | 351.51 | 2.23% | ― | 15.18% | -48.78% | |
60 Neutral | $6.58B | 11.55 | 3.14% | 4.05% | 2.58% | -21.37% | |
60 Neutral | $1.13B | 13.60 | -20.16% | 5.46% | -3.57% | 2.31% | |
60 Neutral | $2.51B | 13.53 | 68.30% | 7.94% | 2.98% | -2.58% | |
50 Neutral | $491.07M | ― | 4.15% | 6.72% | -6.02% | -136.86% |
* Consumer Cyclical Sector Average
Performance Comparison
LOCO
El Pollo LoCo
9.35
0.75
8.72%
JACK
Jack In The Box
26.04
-26.48
-50.42%
PZZA
Papa John's International
34.53
-22.82
-39.79%
TXRH
Texas Roadhouse
165.96
10.32
6.63%
WEN
Wendy's
12.50
-6.27
-33.40%
SHAK
Shake Shack
87.74
-17.20
-16.39%
El Pollo LoCo Earnings Call Summary
Earnings Call Date:May 01, 2025
(Q4-2024)
| % Change Since: -12.04%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant achievements in revenue growth, margin improvement, and strategic expansion plans, driven by culinary innovation and cost-saving initiatives. However, challenges such as decreased transactions and wage inflation were noted. The overall sentiment is positive, with the company showing strong progress towards its goals.Q4-2024 Updates
Positive Updates
Revenue Growth
Total revenue for the fourth quarter was $114.3 million, a 1.8% increase compared to $112.2 million in the fourth quarter of 2023. Company-operated restaurant revenue also increased by 1.8%.
Margin Improvement
Restaurant contribution margins improved to 17.4% for 2024, a 190 basis point improvement year-over-year.
Culinary Innovation
Introduction of new products like Mango Habanero chicken and fresca wraps and salads, driving both consumer interest and operational simplicity.
Expansion Plans
Plan to open 10 new restaurants in 2025, with a focus on expanding outside California into states like Arizona, Colorado, and Texas.
Cost Savings Initiatives
Identified cost savings across the P&L, contributing to improved economics and profitability.
New Restaurant Prototype
Introduction of a new iconic restaurant prototype, designed to reduce build costs and drive improved cash-on-cash returns, with build costs under $2 million.
Positive Customer Feedback
Implementation of a new customer feedback system to improve service quality and customer satisfaction.
Franchise Expansion Interest
Increased interest and engagement from franchise partners, with ongoing discussions and meetings growing.
Negative Updates
Decrease in Transactions
There was a 6.8% decrease in transactions in the fourth quarter, despite a 9% increase in average check size.
Wage Inflation Impact
Wage inflation of approximately 15% due to California's minimum wage increase impacted labor expenses.
Franchise Comparable Sales Decline
Franchise revenue was affected by a comparable restaurant sales decrease of 0.1%.
Occupancy and Operating Expenses Increase
Occupancy and other operating expenses increased by 60 basis points due to higher rent and third-party delivery expenses.
Company Guidance
During the El Pollo Loco Fourth Quarter 2024 Earnings Conference Call, Chief Financial Officer Ira Fils and CEO Elizabeth Williams provided guidance for 2025, highlighting several key metrics. The company aims to open 1 to 2 company-owned restaurants and 8 to 9 franchise restaurants, with a capital expenditure plan of $30 million to $34 million. They expect general and administrative expenses to be between $48 million and $51 million, including approximately $5 million in stock compensation expenses. The restaurant contribution margin is projected to range from 17.25% to 17.75%, despite a 25 basis point unfavorable impact from new tariffs. Wage inflation is anticipated to be 5% to 6%, with commodity inflation expected between 1.5% and 2.5% for the year. Additionally, El Pollo Loco plans to remodel 60 to 80 restaurants, focusing on enhancing customer experience and operational efficiency. The company also forecasts an effective tax rate of 27.5% to 28.5% for the year, emphasizing a strategic focus on culinary innovation and brand transformation to drive growth and profitability.El Pollo LoCo Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
El Pollo Loco Expands Board with Joe Taylor Appointment
Positive
Jan 13, 2025
El Pollo Loco announced the appointment of Joe Taylor to its Board of Directors, filling a vacancy and expanding the board to eight members. Taylor’s extensive experience in restaurant finance and leadership, particularly from his tenure at Brinker International, is expected to support El Pollo Loco’s growth strategy and enhance its market position in the restaurant industry.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.