Company Overview
El Pollo Loco Holdings, Inc., operating through its subsidiary El Pollo Loco, Inc., functions as a developer, franchisor, and operator of quick-service restaurants carrying the El Pollo Loco brand. The corporation operates within the Consumer Cyclical sector, specifically inside the Restaurants industry, which classifies it as a business whose performance is sensitive to economic fluctuations and consumer discretionary spending. This entity maintains a workforce of 4,034 employees and holds a total market capitalization of $429.27 million while generating annual revenue of $490.05 million. These valuation and revenue figures indicate that the company holds a mid-cap position in the market, suggesting a scale that is significant enough to generate substantial cash flow but remains distinct from the largest industry conglomerates. The geographic footprint is concentrated in California, Nevada, Arizona, Texas, Colorado, Utah, and Louisiana, reflecting a regional operational model within the United States.
Financial Health
The company reported revenue of $490.05 million, net income of $26.49 million, and EBITDA of $61.64 million over the trailing twelve months. The substantial gap between the $490.05 million in revenue and the $26.49 million in net income reveals a cost structure where operating expenses and taxes consume approximately 94.6% of total sales before interest and non-operating items are considered. Free cash flow stands at $28.27 million, which represents the actual cash generated after capital expenditures, indicating a level of financial flexibility available for debt repayment or potential future expansion initiatives. Profitability is further detailed by three key margins: a gross margin of 22.2%, an operating margin of 8.7%, and a profit margin of 5.4%, where the low gross margin suggests high competition or significant food and labor costs relative to sales, while the operating and profit margins reflect the efficiency of managing those overheads. The balance sheet shows a cash balance of $6.23 million against total debt of $241.01 million, resulting in a debt-to-equity ratio of 82.80, which indicates a highly leveraged financial structure reliant on borrowed capital. This leverage is compounded by a current ratio of 0.32, signaling that current assets are only one-third of current liabilities and highlighting potential short-term liquidity constraints in meeting immediate obligations. Return on equity is measured at 9.6% and return on assets at 4.8%, metrics that suggest management effectiveness in generating returns is moderate, with equity returns outpacing asset returns due to the high leverage present on the books.
Valuation Assessment
The trailing twelve-month P/E ratio is 15.92, while the forward P/E is projected at 12.98, implying that the market expects earnings to grow faster in the coming year than they have in the past. The price-to-book ratio stands at 1.47, indicating that the market values the company at a 47% premium over the net asset value recorded on the balance sheet. Alternative valuation metrics include a price-to-sales ratio of 0.88 and an EV/EBITDA of 10.77, which suggest the company is trading at a valuation consistent with its revenue generation and cash flow capabilities relative to its enterprise value. The stock has a 52-week high of $14.50 and a 52-week low of $8.29, meaning the current trading price sits within the historical range established over the last year. The beta value is 0.94, which indicates that the stock price volatility is slightly lower than the broader market, moving with a sensitivity that is marginally less than the overall market index.
Growth & Income
Revenue growth over the last year is 8.1%, and earnings growth over the last year is also 8.1%, indicating that profitability is expanding at the exact same rate as top-line sales rather than outpacing them. As a non-dividend payer, the company reports a dividend yield of N/A and a payout ratio of 0.0%, meaning the organization does not distribute cash to shareholders and instead retains earnings to fund operations or growth initiatives. This reinvestment strategy is evident given the absence of a dividend history and the focus on maintaining a strong cash flow position relative to debt obligations. The overall growth and income profile is characterized by consistent double-digit expansion in earnings relative to a mid-cap market capitalization, supported by a lack of dividend obligations that allows for full retention of net income.