El Pollo Loco Holdings, Inc. (NASDAQ:LOCO) shares have had a really impressive month, gaining 25% after a shaky period beforehand. Looking further back, the 12% rise over the last twelve months isn't too bad notwithstanding the strength over the last 30 days.
Even after such a large jump in price, given about half the companies in the United States have price-to-earnings ratios (or "P/E's") above 18x, you may still consider El Pollo Loco Holdings as an attractive investment with its 11.8x P/E ratio. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's limited.
Recent times have been pleasing for El Pollo Loco Holdings as its earnings have risen in spite of the market's earnings going into reverse. One possibility is that the P/E is low because investors think the company's earnings are going to fall away like everyone else's soon. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.
NasdaqGS:LOCO Price to Earnings Ratio vs Industry May 31st 2024 If you'd like to see what analysts are forecasting going forward, you should check out our free report on El Pollo Loco Holdings.
What Are Growth Metrics Telling Us About The Low P/E?
El Pollo Loco Holdings' P/E ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the market.
If we review the last year of earnings growth, the company posted a terrific increase of 25%. The latest three year period has also seen a 28% overall rise in EPS, aided extensively by its short-term performance. Therefore, it's fair to say the earnings growth recently has been respectable for the company.
Looking ahead now, EPS is anticipated to slump, contracting by 11% during the coming year according to the four analysts following the company. With the market predicted to deliver 13% growth , that's a disappointing outcome.
With this information, we are not surprised that El Pollo Loco Holdings is trading at a P/E lower than the market. Nonetheless, there's no guarantee the P/E has reached a floor yet with earnings going in reverse. Even just maintaining these prices could be difficult to achieve as the weak outlook is weighing down the shares.
What We Can Learn From El Pollo Loco Holdings' P/E?
The latest share price surge wasn't enough to lift El Pollo Loco Holdings' P/E close to the market median. It's argued the price-to-earnings ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.
We've established that El Pollo Loco Holdings maintains its low P/E on the weakness of its forecast for sliding earnings, as expected. At this stage investors feel the potential for an improvement in earnings isn't great enough to justify a higher P/E ratio. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.
Plus, you should also learn about this 1 warning sign we've spotted with El Pollo Loco Holdings.
If you're unsure about the strength of El Pollo Loco Holdings' business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.
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El Pollo Loco Holdings, Inc.(纳斯达克:LOCO)的股票在动荡时期后经历了一段非常成功的月份,累计上涨25%。向后看,过去12个月的上升12%并不太坏,尽管过去30天的强势表现。
即使在股价大幅飙升后,由于美国约有一半的公司的市盈率超过18倍,因此您可能仍认为El Pollo Loco Holdings(P / E为11.8倍)是一项有吸引力的投资。但是,只看市盈率是不明智的,因为有可能存在限制的原因。
尽管市场收益逆转,但近期对El Pollo Loco Holdings而言十分愉快的是其盈利增长。其中一个可能的原因是市盈率较低,因为投资者认为该公司的盈利将像其他公司一样很快消失。如果您喜欢该公司,则会希望事实并非如此,以便在它失宠时可以潜在地购买一些股票。
NasdaqGS:LOCO市盈率与行业板块的比较(2024年5月31日)如果您想了解分析师的未来预测,您应该查看我们有关El Pollo Loco Holdings的免费报告。
增长指标对低P/E告诉我们什么?
El Pollo Loco Holdings的市盈率对于预计只能提供有限增长而且表现不如市场的公司而言是典型的。