Will Revenue Growth Drive El Pollo Loco's (LOCO) Q3 Earnings?
Zacks Investment Research | Oct 30, 2017 10:55PM ET
El Pollo Loco Holdings, Inc. (NASDAQ:LOCO) is scheduled to report third-quarter 2017 results on Nov 2, after market close.
Last quarter, El Pollo Loco Holdings came up with a positive earnings surprise of 5.00%. In fact, the company has surpassed earnings in two of the trailing four quarters, recording an average beat of 1.59%.
Consistent unit development is likely to drive the company’s top line in the quarter. For the current quarter, the Zacks Consensus Estimate for revenues is pegged at $97 million and $6.3 million for company-operated restaurant and franchise, reflecting a year-over-year increase of 7.8% and 3.1%, respectively.
Notably, El Pollo Loco is known for its various sales building efforts. The company’s relentless focus on providing excellent service, reasonable pricing and its advertising campaign are expected to continue to boost comps. Banking on menu innovation, limited time offers and a strong brand positioning, the company witnessed traffic growth in the last reported quarter. The trend is expected to continue in the to-be-reported quarter.
Notably, the consensus estimate for system-wide comps growth in the third quarter is pegged at 2.3% as compared with 1.6% recorded in the prior-year quarter.
In the third quarter, comps at company-operated restaurants are estimated to grow 2.1% year over year whereas the same at Franchise restaurants are projected to rise 2.4%. In the year-ago quarter, comps at company-operated restaurants and Franchise restaurants grew 1.4% and 1.8%, respectively.
In addition to its sales-boosting efforts, El Pollo Loco has made significant progress in various technology initiatives, designed to provide convenience to its loyalty customers. In the second quarter, the company had initiated its partnership with Olo's Dispatch Delivery service, which covers 40% of El Polo Loco’s system-wide locations. The company expects the technological and delivery initiatives to be one of the major sales drivers in the to-be-reported quarter. The consensus estimate for current-quarter revenues is at $103.2 million, reflecting a 7.7% year-over-year increase.
However, the recent hurricanes — Harvey and Irma — are likely to impact the company’s performance in the third quarter. In fact, according to data from Black Box Intelligence, overall restaurant comps declined 1.9% year over year in the month of September.
Shares of a number of restaurants including El Pollo Loco plummeted after the storms hit the United States. In the past three months, the company lost 13.4%, comparing unfavorably with the Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.