El Pollo Loco Holdings, Inc. (NASDAQ: LOCO)

Sector: Consumer Cyclical Industry: Restaurants CIK: 0001606366
Market Cap 311.97 Mn
P/B 1.10
P/E 12.05
P/S 0.65
ROIC (Qtr) 5.44
Div Yield % 0.00
Rev 1y % (Qtr) 0.93
Total Debt (Qtr) 252.34 Mn
Debt/Equity (Qtr) 0.89

About

El Pollo Loco Holdings, Inc., often recognized by its stock symbol 'LOCO,' operates in the limited service restaurant (LSR) segment, specializing in fire-grilled chicken dishes. The company, founded in 1980, has grown to encompass 495 restaurants, combining 172 company-operated and 323 franchised locations across California, Arizona, Nevada, Texas, Utah, Colorado, and Louisiana. El Pollo Loco's primary business activities revolve around the sale of its signature fire-grilled chicken products and Mexican-inspired entrees, sides, and desserts. The...

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Price action

Investment thesis

Bull case

  • Tangible assets of 292.19M provide robust 6.99x coverage of other current liabilities 41.79M, indicating strong asset backing.
  • Operating cash flow of 39.80M fully covers other non-current liabilities 14.84M by 2.68x, showing strong long-term stability.
  • Operating cash flow of 39.80M provides strong 22.93x coverage of inventory 1.74M, indicating efficient inventory management.
  • Operating cash flow of 39.80M provides strong 4.55x coverage of tax liabilities 8.74M, showing excellent fiscal position.
  • Cash reserves of 10.87M exceed inventory value of 1.74M by 6.26x, indicating strong liquidity and inventory management.

Bear case

  • Operating cash flow of 39.80M barely covers its investment activities of (18.31M), with a coverage ratio of -2.17, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • High receivables of 10.26M relative to inventory of 1.74M (5.91 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Operating earnings of 40.79M show weak coverage of depreciation charges of 15.75M, with a 2.59 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 21.49M represents just -1.41x of debt issuance (15.22M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating cash flow of 39.80M barely covers operating expenses of 62.90M with a 0.63 ratio, suggesting thin operational efficiency margins and limited flexibility.

Peer comparison

Companies in the Restaurants
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MCD Mcdonalds Corp 222.05 Bn 26.39 8.45 55.82 Bn
2 SBUX Starbucks Corp 95.51 Bn 51.45 2.57 26.61 Bn
3 CMG Chipotle Mexican Grill Inc 50.94 Bn 33.15 4.32 4.98 Bn
4 YUM Yum Brands Inc 43.17 Bn 29.83 5.36 11.55 Bn
5 QSR Restaurant Brands International Inc. 22.43 Bn 24.33 2.42 15.64 Bn
6 DRI Darden Restaurants Inc 21.91 Bn 19.91 1.77 6.16 Bn
7 YUMC Yum China Holdings, Inc. 18.12 Bn 20.05 1.57 1.84 Bn
8 DPZ Dominos Pizza Inc 14.57 Bn 24.72 3.01 5.05 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.93 2.05
EV to Cash from Ops. EV/CFO 14.10 16.57
EV to Debt EV to Debt 2.22 4.75
EV to EBIT EV/EBIT 13.76 3.45
EV to EBITDA EV/EBITDA 9.93 9.76
EV to Free Cash Flow [EV/FCF] EV/FCF 26.12 29.06
EV to Market Cap EV to Market Cap 1.80 6.55
EV to Revenue EV/Rev 1.17 2.40
Price to Book Value [P/B] P/B 1.10 -1.40
Price to Earnings [P/E] P/E 12.05 13.35
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 -9.56
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 18.72
Dividend per Basic Share Div per Share (Qtr) 0.00 0.84
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 30.41
Interest Coverage Int. cover (Qtr) 8.54 -86.85
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 11.15 -24.56
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 37.71 35.50
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -0.72
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 3.12 -564.81
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 2.19 25.78
EBIT Growth (1y) % EBIT 1y % (Qtr) 3.01 -507.68
EBT Growth (1y) % EBT 1y % (Qtr) 7.43 -41.98
EPS Growth (1y) % EPS 1y % (Qtr) 11.39 -126.51
FCF Growth (1y) % FCF 1y % (Qtr) -25.16 5,724.78
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 5.30 23.70
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.80 0.99
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.07
Cash Ratio Cash Ratio (Qtr) 0.16 0.78
Current Ratio Curr Ratio (Qtr) 0.41 1.47
Debt to Equity Ratio Debt/Equity (Qtr) 0.89 0.05
Interest Cover Ratio Int Coverage (Qtr) 8.54 -86.85
Times Interest Earned Times Interest Earned (Qtr) 8.54 -86.85
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 11.80 7.71
EBIT Margin % EBIT Margin % (Qtr) 8.48 -2.27
EBT Margin % EBT Margin % (Qtr) 7.49 -1.97
Gross Margin % Gross Margin % (Qtr) 31.60 34.04
Net Profit Margin % Net Margin % (Qtr) 5.40 -3.69