Will Higher Costs Weaken El Pollo Loco's (LOCO) Q4 Earnings?

By Zacks Investment ResearchStock MarketsMar 06, 2018 02:53AM ET

www.investing.com/analysis/will-higher-costs-weaken-el-pollo-locos-loco-q4-earnings-200296153

Will Higher Costs Weaken El Pollo Loco's (LOCO) Q4 Earnings?

By Zacks Investment Research | Mar 06, 2018 02:53AM ET

Saved. See Saved Items.

This article has already been saved in your Saved Items

AMZN

+0.73%

Add to/Remove from Watchlist

BJRI

-3.91%

Add to/Remove from Watchlist

CAKE

-1.40%

Add to/Remove from Watchlist

CHUY

0.00%

Add to/Remove from Watchlist

LOCO

-1.15%

Add to/Remove from Watchlist

El Pollo Loco Holdings, Inc. (NASDAQ:LOCO) is scheduled to report fourth-quarter 2017 results on Mar 8, after market close.

The company’s strong sales building strategies and consistent unit development are likely to reflect in the fourth quarter’s top line. However, the bottom line in the to-be-reported quarter might have been under high cost pressure.

Notably, shares of El Pollo Loco have lost 20.3% in the past year, underperforming the industry’s gain of 11.3%.

Let’s find out how the company will shape up in fourth-quarter results.

Sales-Building Efforts to Aid Top Line

El Pollo Loco is known for its various sales building efforts. The company’s relentless focus on providing excellent service, reasonable pricing and its advertising campaigns are expected to continue boosting revenues. Banking on menu innovation, limited-time offers and a strong brand positioning, the company witnessed sales growth in the last reported quarter. The trend is expected to continue in the to-be-reported quarter as well.

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $95 million, mirroring 2.7% year-over-year growth.

In addition to these innovative strategies, El Pollo Loco has made significant progress with various technology initiatives, designed to provide convenience to loyalty customers. In June 2017, the company had initiated a partnership with Olo's Dispatch Delivery service, which covers 40% of El Pollo Loco’s system-wide locations. The technological and delivery initiatives are likely to boost comps in the fourth quarter.

Subsequently, the consensus estimate projects system-wide comps to grow 0.6% in the fourth quarter compared with 1.3% decline in the year-ago quarter. Comps at franchise restaurants are also expected to have grown 1.2% in the quarter to be reported, comparing favorably with the prior-year quarter’s 1.9% comps decline.

Elevated Costs to Dampen Earnings

The consensus estimate for fourth-quarter earnings is pegged at 10 cents, suggesting a 16.7% year-over-year decline.

The company’s higher labor costs, pre-opening costs of outlets and expenses related to the execution of various sales-building initiatives are expected to keep profits under pressure. Increasing costs are expected to more than offset the benefits from revenue growth.

Our Quantitative Model Does Not Predict a Beat

El Pollo Loco does not have the right combination of two main ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

Zacks ESP: The company has an Earnings ESP of 0.0%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The restaurant has a Zacks Rank #3.

Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

El Pollo Loco Holdings, Inc. Price and EPS Surprise

El Pollo Loco Holdings, Inc. Price and EPS Surprise | El Pollo Loco Holdings, Inc. Quote

Stocks to Consider

Here are a few restaurant stocks, which according to our model possess the right combination of elements to post an earnings beat.

Chuy's Holdings (NASDAQ:CHUY) has an Earnings ESP of +1.94% and a Zacks Rank #2 (Buy). The company is expected to report quarterly numbers on Mar 8, 2018. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BJ’s Restaurants (NASDAQ:BJRI) has an Earnings ESP of +1.53% and a Zacks Rank #2. The company is anticipated to report quarterly figures on Apr 26, 2018.

Cheesecake Factory (NASDAQ:CAKE) has an Earnings ESP of +0.23% and a Zacks Rank #3. The company is expected to report quarterly numbers on May 2, 2018.

Wall Street’s Next Amazon (NASDAQ:AMZN)

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>

The Cheesecake Factory Incorporated (CAKE): Free Stock Analysis Report

BJ's Restaurants, Inc. (BJRI): Free Stock Analysis Report

Chuy's Holdings, Inc. (CHUY): Free Stock Analysis Report

El Pollo Loco Holdings, Inc. (LOCO): Free Stock Analysis Report

Original post

Zacks Investment Research

Nvidia Earnings: Here's Why the Stellar Q4 Results Got a Cold Market... By David Wagner - Feb 27, 2025

Nvidia’s earnings beat didn’t erase investor concerns over slowing growth. Soft Q1 guidance and valuation worries may limit the stock’s upside. Weak network and gaming sales...

Etsy Loses Its Meme Stock Shine – Is It Still a Buy? By Chris Markoch - Feb 27, 2025

Shares of Etsy (NASDAQ:ETSY) are down approximately 7% since the company reported earnings on February 19. Concerns over slowing growth are overriding revenue and earnings that...

Buffett Remains on the Sidelines as Cash Piles Continue to Build By Thomas Hughes - Feb 27, 2025 1

Warren Buffett and Berkshire Hathaway (NYSE:BRKa) always make headlines in February when the firm holds its annual meeting. Among the many takeaways is what the company has been...

Add a Comment

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:

Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
Only English comments will be allowed.
Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

I have read Investing.com's comments guidelines and agree to the terms described.

I Agree

Write your thoughts here

Are you sure you want to delete this chart?

Delete Cancel

Post

Post also to:

Replace the attached chart with a new chart ?

Replace Cancel

1000

Comment Guidelines

Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.

Please wait a minute before you try to comment again.

Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.

<div id="comment">
				<div class="comment js-comment" data-comment-id="{commentID}" id="comment-{commentID}" data-user-id="">
    <div class="mainComment js-content">
       <div class="commentInnerWrapper">
        <a href="{userLink}" class="js-user-link"><img src="{userImage}" width="33" height="33" alt="{usernameAlt}" class="img" onerror="this.src='https://i-invdn-com.investing.com/defaultUserMaleTmp.png';"></a><div class="commentBody">
                					<span class="commentUsername">
                    	<a href="{userLink}" class="js-user-link js-user-name">{username}</a>
					</span>
                                <span class="js-date" comment-date="{dateFormat}" comment-date-formatted="{dateFormatted}" title="{dateTitle}">Just Now</span>
                <div class="commentDropDown js-commentDropDownWrapper " data-user-id="" data-cid="{commentID}">
	<a href="javascript:void(0);" class="threeDotsIconSmall js-thinDropdownArrow"></a>
	<div class="tooltipPopup commentActionsPop noHeader js-commentDropDownOptions displayNone">
		<div class="addRow js-option share">
			<a href="javascript:void(0);" class="js-commentSharePopup" data-cid="{commentID}" data-curl="{commentLink}"><span class="smallShareIcon middle"></span>Share</a>
		</div>

<div class="js-option addRow follow">
            <div class="js-follow-post-button" data-reg_ep="follow comment">
                <span class="alertfollowIcon middle"></span>Follow this post            </div>
            <div class="js-unfollow-post-button displayNoneImp">
                <span class="alertUnfollowIcon middle"></span>Unfollow this post            </div>
        </div>

<div class="addRow js-option save"  data-reg_ep="save comment">
		<a href="javascript:void(0);" class="js-save-item-btn" data-item-type="comments" data-item-id="{commentID}">
			<i class="saveItemBigIcon middle"></i>
			Save		</a>
	</div>
	<div class="addRow saveItemsConfirmation noHover displayNone js-saveItemResult">
		
<div class="content js-saveItemSuccess displayNone">
	<span class="mediumGreenSuccessIcon"></span><span>Saved. See <a href="/members-admin/saved-items" target="_blank">Saved Items</a>.</span>
	<a href="javascript:void(0);" class="bugCloseIcon js-close"></a>
</div>
<div class="content js-saveItemAlreadySaved saveItemAlreadySaved displayNoneImp">
	<span>This comment has already been saved in your <a href="/members-admin/saved-items" target="_blank">Saved Items</a></span>
	<a href="javascript:void(0);" class="bugCloseIcon js-close"></a>
</div>
	</div>

<div class="addRow shareButtons js-sharePopup displayNone">
			<div class="js-shareComment"><span class="js-shareCommentSpan"></span></div>
		</div>
	</div>
</div>
                 <div class="commentAuthor js-comment-by-author"><span class="commentAuthorIcon"></span>Author's response</div>             </div>
		<div id="commentText-{commentID}" class="js-text-wrapper commentText withImage">
							<div id="commentBigChart{commentID}" class="commentBigChart js-comment-chart" onclick="openViewChartPopup('{commentID}')">
					<img src="https://d1-invdn-com.investing.com/comments_images/{commentImage}" alt="{commentAlt}">
					<i class="newMagnifyChartIcon"></i>
				</div>
						<span class="js-text">{commentContent}</span>
			<div class="clear"></div>
							<div class="commentButtons js-not-master-user">
					<a href="javascript:void(0)" class="reply js-reply-btn" data-real-parent-id="{commentID}" data-to-user-name="{username}" data-to-user-id="">Reply</a>
					<div class="inlineblock likeDislikeBox js-like-dislike-box" data-item-id="{commentID}">
	<input class="js-like-checkbox" type="checkbox" name="option" value="Yes" id="like_{commentID}">
	<label for="like_{commentID}" class="like" title="I agree"></label>
	<span class="numOfLikes js-like-count lighterGrayFont">0</span>
	<input class="js-dislike-checkbox" type="checkbox" name="option" value="No" id="dislike_{commentID}">
	<label for="dislike_{commentID}" class="dislike" title="I disagree"></label>
	<span class="numOfDislikes js-dislike-count lighterGrayFont">0</span>
</div>

<div class="reportComment js-flag float_lang_base_2">
                            <a href="javascript:void(0);" id="commentFlag_{commentID}">
                                <span class="reportCommentIcon middle"></span><span class="inlineblock middle">Report</span>
                            </a>
                        </div>
                    				</div>
					</div>
	   </div>
	</div>
	</div>			</div>
			<div id="reply">
				
    <div class="commentReply js-comment js-comment-reply" data-comment-id="{commentID}" id="comment-{commentID}" data-user-id="">
		<div class="commentInnerWrapper"><a href="{userLink}" class="js-user-link"><img src="{userImage}" width="33" height="33" alt="{usernameAlt}" class="img" onerror="this.src='https://i-invdn-com.investing.com/defaultUserMaleTmp.png';"></a><div class="commentBody js-content">
            				<span class="commentUsername">
					<a href="{userLink}" class="commentUsername js-user-link js-user-name" onMouseOver="">{username}</a>
				</span>
                        <span class="js-date" comment-date="{dateFormat}" comment-date-formatted="{dateFormatted}" title="{dateTitle}">Just Now</span>
			 <div class="commentAuthor js-comment-by-author"><span class="commentAuthorIcon"></span>Author's response</div> 			<div class="commentDropDown js-commentDropDownWrapper " data-user-id="" data-cid="{commentID}">
	<a href="javascript:void(0);" class="threeDotsIconSmall js-thinDropdownArrow"></a>
	<div class="tooltipPopup commentActionsPop noHeader js-commentDropDownOptions displayNone">
		<div class="addRow js-option share">
			<a href="javascript:void(0);" class="js-commentSharePopup" data-cid="{commentID}" data-curl="{commentLink}"><span class="smallShareIcon middle"></span>Share</a>
		</div>

</div>
		<div id="commentText-{commentID}" class="js-text-wrapper commentText withImage">
							<div id="commentBigChart{commentID}" class="replyBigChart displayNone js-comment-chart">
					<img src="https://d1-invdn-com.investing.com/comments_images/{commentImage}" alt="{commentAlt}">
					<i class="newMagnifyChartIcon"></i>
				</div>
				<span id="commentSmallChart{commentID}" class="commentSmallChart pointer js-comment-chart" onclick="openViewChartPopup('{commentID}')">
                    <img src="https://d1-invdn-com.investing.com/comments_images/{commentImageSmall}" width="116" height="52" alt="{commentAlt}">
                    <span class="chartMagnifyOverlay displayNone"></span>
                    <span class="searchGlassIcon chartMagnify displayNone"></span>
                </span>
						<span class="js-text">{commentContent}</span>
			<div class="clear"></div>
							<div class="commentButtons js-not-master-user">
					<a href="javascript:void(0)" class="reply js-reply-btn" data-real-parent-id="{commentID}" data-to-user-name="{username}" data-to-user-id="">Reply</a>
					<div class="inlineblock likeDislikeBox js-like-dislike-box" data-item-id="{commentID}">
	<input class="js-like-checkbox" type="checkbox" name="option" value="Yes" id="like_{commentID}">
	<label for="like_{commentID}" class="like" title="I agree"></label>
	<span class="numOfLikes js-like-count lighterGrayFont">0</span>
	<input class="js-dislike-checkbox" type="checkbox" name="option" value="No" id="dislike_{commentID}">
	<label for="dislike_{commentID}" class="dislike" title="I disagree"></label>
	<span class="numOfDislikes js-dislike-count lighterGrayFont">0</span>
</div>

Are you sure you want to delete this chart?

Delete Cancel

Post

Replace the attached chart with a new chart ?

Replace Cancel

1000

Comment Guidelines

Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.

Please wait a minute before you try to comment again.

I feel that this comment is:

Spam

Offensive

Thank You!

Your report has been sent to our moderators for review

Central Banks

Interest Rates

Next Meeting

FED

4.50%

Mar 19, 2025

ECB

2.90%

Mar 06, 2025

BOE

4.50%

Mar 20, 2025

SNB

0.50%

Mar 20, 2025

RBA

4.10%

Apr 01, 2025

BOC

3.00%

Mar 12, 2025

RBNZ

3.75%

Apr 09, 2025

BOJ

0.50%

Mar 19, 2025

CBR

21.00%

Mar 21, 2025

RBI

6.25%

Mar 10, 2025

PBOC

3.10%

BCB

13.25%

Mar 19, 2025

US 30	43,558.0	+123.7	+0.28%
US 500	5,991.4	+35.2	+0.59%
Dow Jones	43,433.12	-188.04	-0.43%
S&P 500	5,956.06	+0.81	+0.01%
Nasdaq	19,075.26	+48.88	+0.26%
S&P 500 VIX	17.98	-1.12	-5.86%
Dollar Index	106.595	+0.266	+0.25%

Crude Oil WTI	69.27	+0.65	+0.95%
Brent Oil	72.75	+0.68	+0.94%
Natural Gas	3.967	+0.008	+0.20%
Gold	2,905.41	-25.19	-0.86%
Silver	32.145	-0.127	-0.39%
Copper	4.6230	+0.0365	+0.80%
US Soybeans	1,031.13	+6.13	+0.60%

U.S. 10Y	4.315	+0.066	+1.55%
U.S. 30Y	4.560	+0.053	+1.18%
U.S. 5Y	4.136	+0.059	+1.45%
U.S. 3M	4.314	+0.013	+0.30%
US 10Y T-Note	110.44	-0.41	-0.37%
Euro Bund	132.56	-0.38	-0.28%
10-2 Yield Spread	17.88	-1.73	-8.82%

Apple	240.36	-6.68	-2.70%
Alphabet A	172.73	-2.69	-1.53%
Tesla	290.80	-12.00	-3.96%
Amazon.com	214.35	+1.55	+0.73%
Netflix	990.06	+12.82	+1.31%
Meta Platforms	673.70	+16.20	+2.46%
Bank of America	43.94	0.00	0.00%

Will Higher Costs Weaken El Pollo Loco's (LOCO) Q4 Earnings?

Related Articles