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Zacks Equity Research

Moving Average Crossover Alert: El Pollo Loco (LOCO)
November 09, 2016

LOCO

Trades from $3

El Pollo Loco Holdings, Inc. (LOCO - Free Report) could be a stock to avoid from a technical perspective, as the firm is seeing unfavorable trends on the moving average crossover front. Recently, the 50 Day Moving Average for LOCO broke out below the 200 Day Simple Moving Average, suggesting short-term bearishness.

This has already started to take place, as the stock has moved lower by 8.9% in the past four weeks. And with the recent moving average crossover, investors have to think that more unfavorable trading is ahead for LOCO stock.

If that wasn’t enough, El Pollo Loco isn’t looking too great from an earnings estimate revision perspective either. It appears as though many analysts have been reducing their earnings expectations for the stock lately, which is usually not a good sign of things to come.

Consider that in the last 30 days, 6 estimates have been reduced, while none have moved higher. Add this in to a similar move lower in the consensus estimate, and there is plenty of reason to be bearish here.

That is why we currently have a Zacks Rank #4 (Sell) on this stock and are looking for it to underperform in the weeks ahead. So either avoid this stock or consider jumping ship until the estimates and technical factors turn around for LOCO. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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