Domo signs strategic collaboration agreement with AWS for AI solutions
Tuesday, Craig-Hallum initiated coverage on El Pollo Loco shares, assigning a Buy rating and setting a price target of $18.00. The research firm’s analyst cited the company’s margin expansion as a key driver for an excellent return on the stock, with potential for further gains if unit growth accelerates. According to InvestingPro data, the company currently trades at a P/E ratio of 12.5x and has a market capitalization of $321 million, suggesting it may be undervalued relative to its growth potential.
El Pollo Loco, known for its Mexican-style grilled chicken, has been focusing on improving its business model. The analyst pointed out that the company has achieved higher restaurant margins and Average Unit Volumes (AUVs), which have enhanced earnings visibility. These improvements have trimmed the business model, positioning El Pollo Loco for a growth phase in the near future. InvestingPro analysis reveals the company maintains a solid gross profit margin of 21.9% and has been profitable over the last twelve months, with management actively buying back shares to enhance shareholder value.
The $18.00 price target set by Craig-Hallum is based on a multiple of 9 times the firm’s Fiscal Year 2026 EBITDA forecast of $66.9 million. The analyst expressed optimism about the stock’s potential, suggesting that it could reach into the low $30s as the company’s unit growth moves to mid-single digits (MSD). Current EBITDA stands at $57.2 million, with analysts tracking on InvestingPro projecting continued profitability with an EPS forecast of $0.93 for FY2025.
El Pollo Loco’s strategic adjustments appear to be resonating with analysts, as the company seeks to capitalize on its stronger financial position. The growth phase that the analyst anticipates could signify a turning point for the restaurant chain, which operates over 480 company-owned and franchised restaurants in the United States.
Investors will be watching El Pollo Loco closely as the company continues to execute its business strategy with the aim of expanding its footprint and enhancing shareholder value. The endorsement from Craig-Hallum could attract more attention to the stock as the market evaluates the company’s potential for growth and return on investment.
In other recent news, El Pollo Loco Holdings Inc (NASDAQ:LOCO). reported fourth-quarter 2024 earnings that exceeded analyst expectations, with an earnings per share (EPS) of $0.20, surpassing the forecasted $0.14. The company’s revenue also beat projections, reaching $114.3 million compared to the expected $113.24 million. Additionally, El Pollo Loco announced plans to open 10 new restaurants in 2025, indicating a strategic expansion initiative. The company has also outlined plans for new product launches in the spring and summer of 2025, aiming to drive customer interest and engagement. Moreover, El Pollo Loco’s restaurant contribution margin improved to 16.7% from 15.8% in the previous year, showcasing operational efficiency. The company anticipates commodity inflation of 1.5-2.5% and wage inflation of 5-6% for 2025. Looking ahead, El Pollo Loco aims to open 1-2 company-owned and 8-9 franchise restaurants, with capital spending projected between $30 million and $34 million. Analyst feedback from firms such as The Benchmark Company and Chivas/Drewes indicates confidence in El Pollo Loco’s strategic direction and operational improvements.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.