Chicago, IL – December 16, 2024 – Zacks Equity Research shares El Pollo Loco LOCO as the Bull of the Day and Nutrien Ltd. NTR as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Maxeon Solar Technologies Ltd. MAXN, Nextracker NXT and First Solar FSLR.
Here is a synopsis of all five stocks.
El Pollo Loco is a leading fire-grilled chicken restaurant known for its healthy food. It’s menu features meals with Mexican flavors made daily.
It operates 495 company-owned and franchised restaurants across 7 U.S. states including Arizona, California, Colorado, Nevada, Texas, Utah, and Louisiana. El Pollo Loco also has 10 licensed restaurant locations in the Philippines.
El Pollo Loco is a small cap company with a market cap of $373 million.
On Dec 12, 2024, El Pollo Loco announced that its popular Double Pollo Fit Bowls are returning for a limited time. The bowls will have two flavors: the Classic and the Street Corn.
Both contain more than 50 grams of protein and high-quality ingredients like avocado and spinach.
The bowls will be available for a limited time, through Feb 19, 2025, which fits in with many people’s New Year’s resolutions, especially around healthy food and wellness. Bowls will start at $10.99.
On Oct 31, 2024, El Pollo Loco reported its third quarter 2024 results and beat on earnings again. It reported earnings of $0.21 versus the Zacks Consensus of $0.17. That’s an earnings beat of $0.04.
El Pollo Loco has either met or beat 11 quarters in a row. It also has only missed one time in the last 5 years, in 2022. That’s an impressive earnings surprise track record, given that it includes 2020, which is the pandemic year.
Revenue was $120.4 million, which was the same as the third quarter 2023. However, its comparable restaurant sales were up 2.7%. Comparable sales are a key industry metric.
Restaurant-level margins rose 230 basis points to 16.7%.
After paying down $11 million on its 2022 5-year senior-secured revolving credit facility, as of Sep 25, 2024, the company’s outstanding debt balance was $76 million with $7.9 million in cash and cash equivalents.
During the quarter, El Pollo Loco repurchased 92,043 shares, or $1.1 million, under its Sep 25, 2024 Share Repurchase Program. After completion of those purchases, it had about $3.1 million left on the program.
Additionally, after the quarter ended, El Pollo Loco paid down another $5 million on the 2022 Revolver. That resulted in outstanding borrowings of $71 million as of Oct 31, 2024.
Given El Pollo Loco’s bullishness, it’s not surprising that the analysts are bullish too.
3 estimates have been raised for 2024 in the last 60 days. That has pushed the 2024 Zacks Consensus up to $0.83 from $0.80. That is earnings growth of 16.9% as the company made just $0.71 last year.
3 estimates were also raised for 2025 at the same time. The Zacks Consensus is looking for $0.93 in 2025, which is another 12.9% earnings growth.
Here is what it looks like on the price and consensus chart. You can see that the 2026 estimate is also looking for further growth.
The stock is off the 2023 lows and has had a nice 2024 rally. However, over the last 3 months, it has pulled back and is under performing the Russell 2000, which is the small cap index.
Shares are attractive. El Pollo Loco is trading at 15x forward earnings. It has a price-to-book ratio of just 1.5. A price-to-book ratio under 3.0 usually indicates value.
It also has a cheap price-to-sales ratio of just 0.8. A price-to-sales ratio under 1.0 indicates there is value as an investor is getting $1.00 worth of sales for just $0.80.
For investors looking for a small cap restaurant company that is slowing expanding out of its primary markets, El Pollo Loco should be on your short list.
Nutrien Ltd. saw falling earnings in 2023 and is expected to see it again in 2024. Will this Zacks #5 (Strong Sell) turn it around in 2025?
Nutrien is a Canadian agribusiness company which is a global provider of crop inputs and services. It operates in agriculture and retail, including products such as potash, nitrogen, crop protection and seeds.
On Nov 6, 2024, Nutrien reported its third quarter results and missed on the Zacks Consensus again. It reported $0.39 versus the consensus of $0.44. That’s a miss of 11.4%.
It has missed 8 out of the last 10 quarters.
Retail sales were down 6% to $3.27 billion from $3.49 billion last year.
Potash sales fell 9% to $884 million from $972 million in the third quarter of 2023. Lower net selling prices were partially offset by record sales volumes.
In Nitrogen, prices were up. Sales also rose 10% to $793 million from $723 million a year ago.
In its comments about the agriculture and retail markets, Nutrien said, “Favorable growing conditions in the US have supported expectations for record US corn and soybean yields and significant soil nutrient removal in 2024.”
“Prospective crop margins have declined compared to the historically high levels in recent years, however we believe most growers in the US Midwest remain in a healthy financial position,” Nutrien said.
“Global grain stocks remain below historical average levels, supporting export demand for North American crops and firm prices for key agriculture commodities such as rice, sugar and palm oil,” Nutrien added.
It’s been a tough 2 years in agriculture. Nutrien’s earnings fell 66.3% in 2023 and are expected to fall 20.1% in 2024.
Will there be a turnaround in 2025?
8 estimates have been cut in the last 60 days for 2025 but the Zacks Consensus is now looking for earnings growth of 3.5% to $3.68 from $3.55 expected in 2024.
In a year when the S&P 500 is up nearly 30%, Nutrien is under performing. Shares are down on the year.
It’s cheap, however, with a forward price-to-earnings (P/E) ratio of 13.6. A P/E ratio under 15 is considered a value stock.
You will get a dividend, for your patience, which is currently yielding 4.5%.
But until prices of potash and nitrogen turn around, earnings will not. Investors interested in fertilizer and agribusiness companies might want to wait on the sidelines until prices turn.
The urgent need to combat greenhouse gas emissions has accelerated the shift from fossil fuels to renewable energy, creating significant opportunities for investors. While this transition will require substantial investments and time, the U.S. solar industry is poised for substantial growth, driven by declining costs and supportive policies. This growth opens up promising avenues in areas such as solar panel manufacturing, which benefits from economies of scale, as well as residential and commercial rooftop installations.
Amid the backdrop, Maxeon Solar Technologies Ltd., Nextracker and First Solar are well poised to gain.
The share of renewables in U.S. electricity generation is expanding rapidly. According to the latest Short-Term Energy Outlook by the U.S. Energy Information Administration (“EIA”), renewables are expected to account for 25% of electricity generation next year, up from an estimated 23% this year. In contrast, coal's share is projected to be unchanged year over year.
EIA projects that coal-fired power plant retirements will rise to 11 GW in 2025, while new installations will include 9 GW of wind capacity and 25 GW of solar capacity. Thus, the United States will be increasingly witnessing increasing electricity generation from renewable sources.
Maxeon Solar
By making advanced solar panels and energy solutions, Maxeon Solar contributes toward combating global warming while making solar energy more accessible and sustainable. By focusing on local manufacturing, the company expects to strengthen its market presence and improve supply chain reliability, which could position it for long-term success as solar energy adoption increases. Carrying a Zacks Rank #3 (Hold), MAXN is likely to see a whopping 87% growth in its bottom line in 2025.
Nextracker
Nextracker is a well-known provider of solar trackers that enable solar panels to follow the sun's movement, thereby increasing the amount of electricity generated by the solar plant. NXT’s trackers are being used in major projects like SB Energy’s Pelican’s Jaw, a large-scale solar and storage project. Its partnerships with prominent players such as SOLV Energy highlight the company’s operational excellence and its ability to secure major contracts in the renewable energy space. NXT, currently carrying a Zacks Rank #2 (Buy), is thus well poised to gain in 2025. You can see the complete list of today’s Zacks #1 Rank stocks here.
First Solar
To accelerate its fight against global warming, First Solar primarily provides eco-efficient solar modules. The advanced thin-film photovoltaic modules of FSLR, with a Zacks Rank of 3, represent highly advanced solar technologies of the next generation. The company’s current contracted backlog of 73.3 GW, combined with an opportunity pipeline of 81.4 GW, including 23.5 GW in mid-to-late stages, demonstrates its strong market position and robust demand for its technology. FSLR is likely to see earnings growth of more than 50% in 2025.
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