What Happened?
Shares of fast food chain El Pollo Loco (NASDAQ: LOCO) jumped 16.5% in the afternoon session after 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.
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What Is The Market Telling Us
El Pollo Loco’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. Moves this big are rare for El Pollo Loco and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 7 days ago when the stock dropped 4.4% on the news that the release of a U.S. jobs report that was much weaker than anticipated signaled potential challenges for consumer spending. The Labor Department reported an unexpected cut of 92,000 jobs last month, a stark contrast to economists' expectations of 60,000 new jobs. The unemployment rate also ticked up to 4.4%. The restaurant and bar industry was hit particularly hard, shedding nearly 30,000 jobs. This downturn in employment could lead to reduced discretionary spending by consumers, a key driver of revenue for the dining industry. The news compounds existing concerns within the sector, as a recent analysis indicated that 9% of full-service restaurants are considered at risk for closure in 2026, with a significant number of operators reporting unprofitability in the previous year.
El Pollo Loco is up 24.2% since the beginning of the year, and at $12.82 per share, has set a new 52-week high. Investors who bought $1,000 worth of El Pollo Loco’s shares 5 years ago would now be looking at an investment worth $659.07.
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