What Happened?
Shares of fast food chain El Pollo Loco (NASDAQ: LOCO) jumped 4.7% in the morning session after the fast-food chain reported strong second-quarter results that surpassed analyst expectations for both revenue and profit. The company posted revenue of $125.8 million, driven by investments in its brand and successful menu innovations like new wraps and salads. Adjusted earnings reached $0.28 per share, beating consensus estimates. El Pollo Loco also highlighted significant growth in its digital channel, which accounted for more than a quarter of all sales. This outperformance occurred while the wider restaurant industry experienced softer demand, prompting analysts to grow more bullish on the company's outlook.
After the initial pop the shares cooled down to $10.44, up 1% from previous close.
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What Is The Market Telling Us
El Pollo Loco’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock gained 15.3% on the news that Biglari Capital offered to acquire the company. Reports revealed LOCO was evaluating the proposal, indicating that a deal was likely to be done. Importantly, Biglari already held approximately 15% of LOCO's shares, making it a significant stakeholder with vested interest in the company's direction.
El Pollo Loco is down 8.5% since the beginning of the year, and at $10.44 per share, it is trading 24.7% below its 52-week high of $13.86 from August 2024. Investors who bought $1,000 worth of El Pollo Loco’s shares 5 years ago would now be looking at an investment worth $588.39.
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