Based on the latest analyst prediction, El Pollo Loco Holdings Inc (NASDAQ:LOCO) is estimated to optimistically grow its earnings by over 150% next year. Presently, with an EPS of $0.236, we can expect an upcoming EPS of $0.652. To determine whether this growth rate expectation is justified, we should take a look at how the company has been performing in the past. See our latest analysis for LOCO
How is LOCO going to perform in the future?
The excitement around El Pollo Loco Holdings’s growth potential is not unfounded. Expectations from 6 analysts are very high, with earnings predicted to rise from today’s level of $0.236 to $0.652 over the next year. This indicates a relatively solid earnings per share growth rate of 176.13% over the next 1-2 years, which is an optimistic outlook in the near term. In the same period we should see the revenue increase from $399M $420M
Basis for the growth
The past can be a helpful indicator for future performance for a stock. We can determine whether this level of expected growth is sustainable and whether the company continues to go from strength to strength. However, LOCO’s earnings growth last year was negative, at -61.15%. Although its past performance is not supportive of a positive growth trend, it could also mean LOCO is growing off a lower base, meaning a higher growth rate is easier to achieve. This sign change in growth could indicate a turnaround initiative.
Next Steps:
For LOCO, there are three fundamental aspects you should look at:
1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
2. Valuation: What is LOCO worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether LOCO is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of LOCO? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.