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Should Value Investors Buy El Pollo Loco (LOCO) Stock?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

El Pollo Loco (LOCO - Free Report) is a stock many investors are watching right now. LOCO is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 15.53, while its industry has an average P/E of 23.51. Over the past year, LOCO's Forward P/E has been as high as 16.11 and as low as 9.75, with a median of 12.69.

Finally, our model also underscores that LOCO has a P/CF ratio of 9.49. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. LOCO's P/CF compares to its industry's average P/CF of 20.86. Within the past 12 months, LOCO's P/CF has been as high as 9.81 and as low as 6.06, with a median of 7.12.

These figures are just a handful of the metrics value investors tend to look at, but they help show that El Pollo Loco is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, LOCO feels like a great value stock at the moment.


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