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El Pollo Loco (LOCO) Q2 Earnings: What's in the Cards?
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El Pollo Loco Holdings, Inc. (LOCO - Free Report) is scheduled to report second-quarter 2016 numbers on Aug 4, after market close.
Last quarter, El Pollo Loco posted a 5.56% negative earnings surprise. However, the company’s earnings surpassed the Zacks Consensus Estimate in three of the last four quarters, with an average beat of 8.85%.
Let’s see how things are shaping up for this announcement.
El Pollo Loco posted positive comps for 19 consecutive quarters on the back of various sales and digital initiatives. We expect the trend to continue in the to-be-reported quarter.
Notably, this fire-roasted chicken specialist’s fresh handcrafted Mexican inspired cuisine has been driving its popularity and ensuring a steady rise in traffic. Moreover, menu innovation and limited time offers have been contributing to traffic growth and should continue doing so in the second quarter. Additionally, increased focus on catering to health-conscious customers by offering customized meals without compromising on flavors should boost traffic.
However, increasing labor costs as a result of higher minimum wages in California – where the company has substantial presence – might keep profits under pressure. Moreover, the pre-opening costs of outlets and expenses related to sales initiatives are likely to dent the quarter’s profits.
Earnings Whispers
Our proven model does not conclusively show that El Pollo Loco is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: El Pollo Loco has an earnings ESP of +5.56%. This is because the Most Accurate estimate stands at 19 cents while the Zacks Consensus Estimate is pegged lower at 18 cents.
Zacks Rank: El Pollo Loco has a Zacks Rank #4 (Sell). Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some restaurant companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) has an earnings ESP of +2.27% and a Zacks Rank #1.
Jack in the Box Inc. (JACK - Free Report) has an earnings ESP of +1.15% and a Zacks Rank #3.
Shake Shack Inc. (SHAK - Free Report) has an earnings ESP of +7.69% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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El Pollo Loco (LOCO) Q2 Earnings: What's in the Cards?
El Pollo Loco Holdings, Inc. (LOCO - Free Report) is scheduled to report second-quarter 2016 numbers on Aug 4, after market close.
Last quarter, El Pollo Loco posted a 5.56% negative earnings surprise. However, the company’s earnings surpassed the Zacks Consensus Estimate in three of the last four quarters, with an average beat of 8.85%.
Let’s see how things are shaping up for this announcement.
EL POLLO LOCO Price and EPS Surprise
EL POLLO LOCO Price and EPS Surprise | EL POLLO LOCO Quote
Factors Likely to Influence this Quarter
El Pollo Loco posted positive comps for 19 consecutive quarters on the back of various sales and digital initiatives. We expect the trend to continue in the to-be-reported quarter.
Notably, this fire-roasted chicken specialist’s fresh handcrafted Mexican inspired cuisine has been driving its popularity and ensuring a steady rise in traffic. Moreover, menu innovation and limited time offers have been contributing to traffic growth and should continue doing so in the second quarter. Additionally, increased focus on catering to health-conscious customers by offering customized meals without compromising on flavors should boost traffic.
However, increasing labor costs as a result of higher minimum wages in California – where the company has substantial presence – might keep profits under pressure. Moreover, the pre-opening costs of outlets and expenses related to sales initiatives are likely to dent the quarter’s profits.
Earnings Whispers
Our proven model does not conclusively show that El Pollo Loco is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: El Pollo Loco has an earnings ESP of +5.56%. This is because the Most Accurate estimate stands at 19 cents while the Zacks Consensus Estimate is pegged lower at 18 cents.
Zacks Rank: El Pollo Loco has a Zacks Rank #4 (Sell). Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some restaurant companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) has an earnings ESP of +2.27% and a Zacks Rank #1.
Jack in the Box Inc. (JACK - Free Report) has an earnings ESP of +1.15% and a Zacks Rank #3.
Shake Shack Inc. (SHAK - Free Report) has an earnings ESP of +7.69% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>