El Pollo Loco LOCO is in the right segment of the restaurant industry: healthy eating. This Zacks Rank #1 (Strong Buy) is expected to grow earnings by the double digits this year and next.

El Pollo Loco is a leading fire-grilled chicken restaurant known for its healthy food. It’s menu features meals with Mexican flavors made daily.

It operates 495 company-owned and franchised restaurants across 7 U.S. states including Arizona, California, Colorado, Nevada, Texas, Utah, and Louisiana. El Pollo Loco also has 10 licensed restaurant locations in the Philippines.

El Pollo Loco is a small cap company with a market cap of $373 million.

Want a Lot of Protein? Double Pollo Fit Bowls are Back to Start 2025

On Dec 12, 2024, El Pollo Loco announced that its popular Double Pollo Fit Bowls are returning for a limited time. The bowls will have two flavors: the Classic and the Street Corn.

Both contain more than 50 grams of protein and high-quality ingredients like avocado and spinach.

The bowls will be available for a limited time, through Feb 19, 2025, which fits in with many people’s New Year’s resolutions, especially around healthy food and wellness. Bowls will start at $10.99.

Another Earnings Beat for El Pollo Loco in Third Quarter 2024

On Oct 31, 2024, El Pollo Loco reported its third quarter 2024 results and beat on earnings again. It reported earnings of $0.21 versus the Zacks Consensus of $0.17. That’s an earnings beat of $0.04.

El Pollo Loco has either met or beat 11 quarters in a row. It also has only missed one time in the last 5 years, in 2022. That’s an impressive earnings surprise track record, given that it includes 2020, which is the pandemic year.

Revenue was $120.4 million, which was the same as the third quarter 2023. However, its comparable restaurant sales were up 2.7%. Comparable sales are a key industry metric.

Restaurant-level margins rose 230 basis points to 16.7%.

El Pollo Loco’s Debt and Share Repurchase Program Update

After paying down $11 million on its 2022 5-year senior-secured revolving credit facility, as of Sep 25, 2024, the company’s outstanding debt balance was $76 million with $7.9 million in cash and cash equivalents.

During the quarter, El Pollo Loco repurchased 92,043 shares, or $1.1 million, under its Sep 25, 2024 Share Repurchase Program. After completion of those purchases, it had about $3.1 million left on the program.

Additionally, after the quarter ended, El Pollo Loco paid down another $5 million on the 2022 Revolver. That resulted in outstanding borrowings of $71 million as of Oct 31, 2024.

Analysts Raise Earnings Estimates on El Pollo Loco for 2024 and 2025

Given El Pollo Loco’s bullishness, it’s not surprising that the analysts are bullish too.

3 estimates have been raised for 2024 in the last 60 days. That has pushed the 2024 Zacks Consensus up to $0.83 from $0.80. That is earnings growth of 16.9% as the company made just $0.71 last year.

3 estimates were also raised for 2025 at the same time. The Zacks Consensus is looking for $0.93 in 2025, which is another 12.9% earnings growth.

Here is what it looks like on the price and consensus chart. You can see that the 2026 estimate is also looking for further growth.

Image Source: Zacks Investment Research

Shares Pull Back: Buying Opportunity in El Pollo Loco?

The stock is off the 2023 lows and has had a nice 2024 rally. However, over the last 3 months, it has pulled back and is under performing the Russell 2000, which is the small cap index.

Image Source: Zacks Investment Research

Shares are attractive. El Pollo Loco is trading at 15x forward earnings. It has a price-to-book ratio of just 1.5. A price-to-book ratio under 3.0 usually indicates value.

It also has a cheap price-to-sales ratio of just 0.8. A price-to-sales ratio under 1.0 indicates there is value as an investor is getting $1.00 worth of sales for just $0.80.

For investors looking for a small cap restaurant company that is slowing expanding out of its primary markets, El Pollo Loco should be on your short list.

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