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Portillo's (PTLO)
NASDAQ:PTLO
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Portillo's
(NASDAQ:PTLO)
Rating:75Outperform
Price Target:
$13.00
▲( 13.04% Upside)
Positive Factors
Growth Strategy
The company's strategic initiatives like loyalty programs, kiosks, and improvements in speed of service could drive growth as these efforts progress.
Investment Potential
The risk/reward profile is seen as skewed to the upside at current valuations, suggesting potential for positive investment returns.
Operational Improvements
The full deployment of ordering kiosks has positively impacted ticket prices and mix shift, ending eight straight quarters of negative mix shift.
Negative Factors
Cost Pressures
Restaurant-level margin contracted a greater-than-expected 110 basis points to 20.8% due to higher commodity and labor costs.
Revenue Performance
Overall revenue was about 2% shy of consensus, as AUVs for the class of 2024 lagged expectations.
Traffic Trends
Continued negative traffic trends are anticipated, impacting sales despite pricing and mix improvements.
Portillo's (PTLO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$901.52M
Dividend YieldN/A
Average Volume (3M)2.18M
Price to Earnings (P/E)26.6
Beta (1Y)1.08
Revenue Growth4.57%
EPS Growth6.89%
CountryUS
Employees8,512
SectorConsumer Cyclical
Sector Strength72
IndustryRestaurants
Share Statistics
EPS (TTM)0.05
Shares Outstanding64,082,530
10 Day Avg. Volume2,566,593
30 Day Avg. Volume2,184,203
Financial Highlights & Ratios
PEG Ratio2.71
Price to Book (P/B)1.77
Price to Sales (P/S)0.00
P/FCF Ratio72.93
Enterprise Value/Market Cap1.43
Enterprise Value/Revenue0.46
Enterprise Value/Gross Profit4.80
Enterprise Value/Ebitda3.74
Forecast
1Y Price Target
$14.75Price Target Upside28.26% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering9
Portillo's Business Overview & Revenue Model
Company DescriptionPortillo's (PTLO) is a renowned American restaurant chain, best known for its Chicago-style hot dogs, Italian beef sandwiches, char-grilled burgers, and chocolate cake. Founded in 1963 and headquartered in Oak Brook, Illinois, Portillo's operates primarily in the fast-casual dining sector, offering a diverse menu that combines traditional American cuisine with local Chicago flavors. The company emphasizes high-quality ingredients and exceptional customer service, which has earned it a loyal customer base across its many locations in the United States.
How the Company Makes MoneyPortillo's generates revenue primarily through the sale of food and beverages in its fast-casual restaurant locations. The company's primary revenue stream comes from in-store dining, takeout, and drive-thru services. Additionally, Portillo's offers catering services, which contribute to its earnings by providing bulk orders for events and gatherings. The company also benefits from merchandise sales, including branded apparel and food products available both online and in-store. Portillo's strategic expansion into various states and its focus on maintaining a strong brand reputation and customer loyalty are significant factors that contribute to its financial success.
Portillo's Financial Statement Overview
Summary
Portillo's has demonstrated strong revenue growth and improved profitability, with significant increases in gross profit margin and operational efficiency. The improved balance sheet with reduced leverage and positive cash flow performance further enhance the company's financial stability. However, historical profitability challenges and existing debt levels remain areas to monitor.Income Statement
Portillo's has shown consistent revenue growth over the years, with a notable increase from $455 million in 2020 to $710 million in 2024. The gross profit margin has improved significantly, reaching around 69.3% in 2024, which is a strong indicator of efficiency. The net profit margin also improved, although it remains relatively modest at approximately 4.2% in 2024. The EBIT and EBITDA margins have shown positive trends, reflecting enhanced operational efficiency. However, the initial negative net income in earlier years highlights past profitability challenges.85
Very Positive
Balance Sheet
The balance sheet shows a stable growth in stockholder's equity from $140 million in 2020 to $401 million in 2024, indicating strong shareholder confidence and reinvestment in the company. The debt-to-equity ratio improved significantly from 3.34 in 2020 to 0.74 in 2024, showing a healthier capital structure. The equity ratio improved to 26.7% in 2024, indicating a stable asset base funded by equity. However, the company still maintains a considerable level of debt, which could pose risks if not managed properly.78
Positive
Cash Flow
Portillo's has demonstrated solid cash flow management with operating cash flow increasing to $98 million in 2024. The company turned around its free cash flow position, achieving positive free cash flow growth from a negative position in 2023. The operating cash flow to net income ratio indicates good cash generation relative to net earnings. Despite significant capital expenditures, the positive free cash flow in 2024 signals effective investment in growth while maintaining liquidity.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 710.55M | 679.90M | 587.10M | 534.95M | 455.47M | Gross Profit |
| 492.83M | 275.17M | 132.51M | 142.08M | 121.94M | EBIT |
| 58.03M | 55.44M | 40.59M | 29.47M | 56.63M | EBITDA |
| 94.79M | 79.85M | 61.50M | 52.78M | 81.22M | Net Income Common Stockholders |
| 29.52M | 18.42M | 10.85M | -54.00M | -8.26M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 22.88M | 10.44M | 44.43M | 39.26M | 41.21M | Total Assets |
| 1.50B | 1.39B | 1.28B | 999.57M | 910.22M | Total Debt |
| 596.23M | 550.41M | 523.60M | 319.15M | 469.70M | Net Debt |
| 573.35M | 539.98M | 479.17M | 279.89M | 428.49M | Total Liabilities |
| 1.01B | 925.43M | 847.18M | 576.17M | 769.51M | Stockholders Equity |
| 401.06M | 322.38M | 256.34M | 171.26M | 140.71M |
| Cash Flow | Free Cash Flow | |||
| 9.85M | -17.14M | 9.83M | 6.69M | 36.82M | Operating Cash Flow |
| 98.04M | 70.78M | 56.89M | 42.87M | 58.27M | Investing Cash Flow |
| -88.11M | -87.84M | -47.02M | -36.26M | -21.42M | Financing Cash Flow |
| 2.51M | -16.93M | -4.71M | -8.78M | -18.05M |
Portillo's Technical Analysis
Negative
11.50
Price Trends
11.69
Positive
12.31
Negative
12.05
Negative
Market Momentum
0.20
Negative
49.64
Neutral
26.24
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PTLO, the sentiment is Negative. The current price of 11.5 is above the 20-day moving average (MA) of 11.45, below the 50-day MA of 11.69, and below the 200-day MA of 12.05, indicating a neutral trend. The MACD of 0.20 indicates Negative momentum. The RSI at 49.64 is Neutral, neither overbought nor oversold. The STOCH value of 26.24 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PTLO.
Portillo's Risk Analysis
Portillo's disclosed 46 risk factors in its most recent earnings report. Portillo's 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 3 New Risks
1.
Our business and operations could be negatively affected if we become the target of any securities litigation or shareholder activism efforts, which could cause us to incur significant expenses, hinder execution of our growth strategy and impact our stock price. Q4, 2024
2.
Our inability or failure to execute on a comprehensive business continuity plan at our Restaurant Support Center following a disaster or force majeure event could have a material adverse impact on our Results. Q4, 2024
3.
The rapid development and integration of artificial intelligence ("AI") and emerging technologies into our processes poses risks to our business. Q4, 2024
Portillo's Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $901.52M | 26.62 | 7.37% | ― | 4.57% | 6.89% | |
73 Outperform | $2.66B | 16.84 | 46.60% | 2.06% | 4.42% | 48.23% | |
70 Neutral | $930.86M | 44.27 | 6.01% | ― | 2.91% | -4.86% | |
66 Neutral | $1.25B | 34.91 | 7.80% | 1.83% | 2.26% | -56.99% | |
62 Neutral | $1.34B | 17.28 | -20.16% | 4.49% | -2.77% | 4.01% | |
62 Neutral | $6.88B | 11.26 | 2.78% | 3.93% | 2.65% | -22.00% | |
58 Neutral | $999.07M | 89.27 | 1.86% | ― | 14.43% | -53.71% |
* Consumer Cyclical Sector Average
Performance Comparison
PTLO
Portillo's
11.72
2.07
21.45%
BJRI
BJ's Restaurants
41.50
6.65
19.08%
CBRL
Cracker Barrel
55.93
11.23
25.12%
PZZA
Papa John's International
42.53
-2.75
-6.07%
CAKE
Cheesecake Factory
52.35
16.39
45.58%
FWRG
First Watch Restaurant Group
15.91
-3.34
-17.35%
Portillo's Earnings Call Summary
Earnings Call Date:May 06, 2025
(Q1-2025)
| % Change Since: 10.58%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted a solid revenue increase and positive impacts from new initiatives like the loyalty program and advertising campaigns. However, these were tempered by slower starts in new markets, increased costs, and economic uncertainties affecting overall growth projections.Q1-2025 Updates
Positive Updates
Revenue Growth and Strong Same Restaurant Sales
Total revenue for the first quarter was $176.4 million, reflecting an increase of $10.6 million or 6.4% compared to last year. Same restaurant sales increased by 1.8%, contributing to a revenue increase of approximately $2.6 million.
Successful Launch of Portillo's Perks Loyalty Program
The Portillo's Perks loyalty program was launched near the end of Q1 with promising early results. The program aims for a personalized data-driven approach to loyalty and has already seen solid redemption rates for initial offers.
Positive Impact of Dallas-Fort Worth Advertising Campaign
The advertising campaign in Dallas-Fort Worth increased brand awareness by about 10% and drove a high-single-digit increase in sales for local restaurants.
Operational Enhancements and New Market Expansions
Portillo's plans to open 12 new restaurants in 2025, including innovative formats like the 'restaurant of the future' and in-line walk-up locations, aiming to expand into new markets and optimize operations.
Negative Updates
Slower Start in New Markets
New restaurants opened in Q4 2024 experienced a slower start, especially in markets like Houston where brand awareness is lower compared to established areas like Dallas.
Increased Costs and Margin Pressure
Food, beverage, and packaging costs as a percentage of revenues increased to 34.6% from 34.3% due to a 3.4% increase in commodity prices. Restaurant level adjusted EBITDA margins decreased by 110 basis points to 20.8%.
Labor Cost Increases
Labor as a percentage of revenues rose to 26.6% from 26.1%, driven by lower transactions, increased benefit expenses, and wage rate investments.
Challenging Economic Environment
Economic uncertainty and macro pressures such as declining consumer confidence, weather challenges, and tariffs have affected overall performance and led to a more conservative revenue growth outlook.
Company Guidance
During the fiscal first quarter 2025 earnings call, Portillo's provided a detailed update on various performance metrics and future expectations. The company reported a same restaurant sales increase of 1.8% and total revenue reaching $176.4 million. The restaurant level adjusted EBITDA was $36.7 million, with a margin of 20.8%. Despite challenges such as declining consumer confidence and bad weather, Portillo's maintained momentum through initiatives like their Portillo's Perks loyalty program and advertising campaigns in Dallas-Fort Worth, which increased brand awareness by about 10% and drove a high single-digit sales increase. The company plans to open 12 new restaurants in 2025, with updated revenue growth expectations in the range of 10% to 12%. They are estimating general and administrative expenses to be between $80 million and $82 million, and adjusted EBITDA growth between 5% to 8%. Portillo's has also been testing a breakfast offering in five Chicagoland locations and continues to optimize their drive-thru and kiosk operations. The company remains focused on accelerating revenue, expanding margins, and leveraging traffic-driving initiatives to achieve their goals amidst economic uncertainties.Portillo's Corporate Events
Business Operations and StrategyFinancial Disclosures
Portillo’s Reports Q1 Revenue Growth Amid Expansion Plans
Neutral
May 6, 2025
Portillo’s Inc. reported its financial results for the first quarter ended March 30, 2025, showing a 6.4% increase in total revenue to $176.4 million, primarily due to new restaurant openings and a rise in same-restaurant sales. Despite facing challenging macro conditions, the company managed to improve operating income slightly to $10.4 million, though net income decreased by $1.4 million to $4.0 million. The company is focusing on strategies to drive traffic and improve margins, including the launch of a loyalty program and testing breakfast offerings. Portillo’s plans to open 12 new restaurants in 2025, targeting expansion in the Sunbelt region.
Executive/Board ChangesBusiness Operations and Strategy
Portillo’s Announces New Board Director Appointment
Neutral
Apr 28, 2025
On April 28, 2025, Portillo’s Inc. announced a cooperation agreement with Engaged Capital to appoint a new director with restaurant operating experience to its Board. This agreement aims to enhance the Board’s expertise and drive strategic initiatives to improve shareholder value, while Engaged Capital has agreed to certain standstill and voting commitments.
Business Operations and StrategyFinancial Disclosures
Portillo’s Reports Revenue Growth and Expansion Plans
Positive
Feb 25, 2025
Portillo’s Inc. reported its financial results for the fourth quarter and fiscal year 2024, showing a 4.5% increase in total revenue to $710.6 million despite a 0.6% decline in same-restaurant sales. The company opened 10 new restaurants in 2024, contributing to its growth strategy, and plans to open 12 more in 2025, focusing on markets outside Chicagoland, particularly in the Sunbelt region.
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.