On Wednesday, Loop Capital adjusted its stock price target for Portillo's, Inc (NASDAQ: PTLO), a well-known restaurant chain. The firm reduced the target to $21.00 from the previous $27.00, while still recommending a Buy rating for the stock.
The adjustment follows Portillo's first-quarter financial results, which revealed lower-than-expected earnings before interest, taxes, depreciation, and amortization (EBITDA) and comparable sales (comps). The company's adjusted EBITDA for the first quarter of 2024 stood at $21.8 million, falling short of Loop Capital's projection of $23.2 million and the consensus estimate of $22.4 million.
Despite the lower EBITDA, Portillo's reported pro-forma earnings per share (EPS) of $0.06, which not only surpassed Loop Capital's estimate of breaking even but also met the consensus. Still, Portillo's comparable sales saw a decline of 1.2% in the quarter, which included a 2.0% increase in ticket size but was offset by a 3.2% decrease in the number of transactions. This performance was contrary to Loop Capital's anticipation of a 3.0% growth and the consensus expectation of a 1.1% rise.
The increase in ticket size was partially due to a 5.1% hike in menu prices, but this was somewhat negated by a negative mix. In response to the first-quarter outcomes, Loop Capital is holding on to its Buy rating on Portillo's shares but has lowered the price target. The new target is based on 17 times the firm's revised 2024 enterprise value to EBITDA (EV/EBITDA) estimate.
InvestingPro Insights
In light of the recent adjustments by Loop Capital, it is pertinent to consider some real-time data and InvestingPro Tips for Portillo's Inc. The company is currently grappling with a significant debt burden and recent performance that indicates the stock is in oversold territory, according to the Relative Strength Index (RSI).
This could potentially signal an opportunity for investors looking for entry points in undervalued stocks. Moreover, Portillo's is trading near its 52-week low, which might attract investors looking for stocks that have been oversold.
From a financial standpoint, Portillo's has a market capitalization of approximately $776.67 million and is trading at a P/E ratio of 30.75, which is high relative to its near-term earnings growth. The company's revenue growth over the last twelve months stood at a solid 13.31%, showing resilience in its business model.
Nevertheless, it is important to note that analysts have revised their earnings downwards for the upcoming period, suggesting that potential investors should be cautious and conduct thorough due diligence.
For those considering an investment in Portillo's, there are additional InvestingPro Tips available that could provide deeper insights into the company's financial health and future prospects. With the use of the promo code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking further valuable investment tips. As of now, there are 12 more InvestingPro Tips available for Portillo's Inc, which could be instrumental in making an informed investment decision.
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