What Happened?
Shares of fast food chain El Pollo Loco (NASDAQ: LOCO) jumped 5.4% in the afternoon session after the stock's positive momentum continued as the company reported strong fourth-quarter results that surpassed Wall Street's expectations.
The company's revenue rose 8% year over year to $123.5 million, while sales at restaurants open for at least 15 months grew by 2.1%. Its profits showed even stronger growth, with adjusted net income jumping 24% to $7.3 million, or $0.25 per share, which was well above the $0.20 per share analysts had forecasted. The company also improved its restaurant contribution margin to 17.5% from 16.7% in the same period the previous year.
Looking ahead, El Pollo Loco announced plans to open 18 to 20 new restaurants in 2026, focusing its expansion outside of California. Following the positive results, Benchmark analyst Todd Brooks upgraded the stock to Buy from Hold.
After the initial pop the shares cooled down to $13.34, up 4.9% from previous close.
Is now the time to buy El Pollo Loco? Access our full analysis report here, it’s free.
What Is The Market Telling Us
El Pollo Loco’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock gained 16.5% on the news that the company reported fourth-quarter results that significantly surpassed Wall Street's profit expectations.
While the fast-food chicken chain's revenue of $123.5 million, an 8.1% year-over-year increase, was in line with analyst forecasts, its bottom-line performance was the main driver of the stock's rally. The company reported adjusted earnings per share of $0.25, which beat consensus estimates by a notable 25%. Furthermore, adjusted EBITDA, a key measure of profitability, also came in well ahead of projections. This strong display of profitability, coupled with a solid 2.1% rise in same-store sales, impressed investors and signaled healthy operational performance, sending the shares sharply higher.
El Pollo Loco is up 29.3% since the beginning of the year, and at $13.34 per share, has set a new 52-week high. Despite the year-to-date gain, investors who bought $1,000 worth of El Pollo Loco’s shares 5 years ago would now be looking at only $706.19.
ONE MORE THING: The $21 AI Application Stock Wall Street Forgot. While Wall Street obsesses over who’s building AI, one company is already using it to print money. And nobody’s paying attention.
AI chip stocks trade at ridiculous valuations. This company processes a trillion consumer signals monthly using AI and trades at a third of the price. The gap won’t last. The institutions will figure it out. You need to see this first. Read the FREE Report Before They Notice.
