Is El Pollo Loco’s Drop Overdone?
Perhaps one of the biggest detractors from El Pollo Loco earnings was the drop in comparable sales that ended a 15-quarter streak.
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
El Pollo Loco Holdings Inc. (NASDAQ: LOCO) reported its second-quarter financial results after the markets closed on Thursday, with horrendously perceived results. Perhaps one of the biggest detractors from earnings was the drop in comparable sales that ended a 15-quarter streak.
The crazy chicken had $0.19 in earnings per share (EPS) on $89.5 million in revenue, compared to consensus estimates from Thomson Reuters that call for $0.18 in EPS on $92.96 million in revenue. The same period from the previous year had $0.16 in EPS on $86.90 million in revenue.
Comparable company-operated restaurant sales in the second quarter decreased 0.5%, driven by a 3.9% decrease in traffic, partially offset by a 3.4% increase in average check. This actually breaks the 15-consecutive quarter streak in which El Pollo Loco had increased its comparable sales in each quarter.
Restaurant contribution was $18.0 million, compared to $18.4 million in the second quarter of 2014. Franchise revenue increased 6.0% to $5.9 million, from $5.5 million year over year.
In terms of its guidance, El Pollo Loco expects net income per share, on a pro forma basis, to be in the range of $0.67 to $0.71, as well as growth in comparable restaurant sales in the range of roughly 3% — down from 3% to 5% — and the restaurant contribution margin of 21.2% to 21.5%. The consensus estimates moved up slightly since then to EPS of $0.70 and $371.26 million in revenue from $0.68 in EPS on revenue of $369.30 million.
Shares of the crazy chicken were down 18.3% at $15.00 on Friday afternoon. The stock has a consensus analyst price target of $27.67 and a 52-week trading range of $17.51 to $40.89.
ALSO READ: 4 High-Flying Stocks That Have Sold Off Far Too Much
Contact [email protected] for any questions or corrections.
Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
