Why Portillo's (PTLO) Stock Is Trading Up Today
What Happened:
Shares of casual restaurant chain Portillo’s (NASDAQ:PTLO) jumped 17.3% in the morning session after the company reported fourth-quarter results, which blew past analysts' EPS expectations. Its revenue, gross margin, and EBITDA also outperformed Wall Street's estimates during the quarter. The main driver behind the company's outperformance was better-than-expected same-store sales growth (4.4% vs estimates of 3.5%). It also opened 6 new restaurants during the quarter (12 for all of 2023) in Illinois, Texas, and Florida. Earlier in the year, the company opened some locations in Arizona. For 2024, the company estimates commodity and wage inflation to be in the mid-single digits. It will seek to offset these headwinds by raising the price of certain menu items by 1.5%. Furthermore, it plans to open at least 9 new restaurants in 2024 and stated its long-term goal of 12-15% annual increases in restaurant locations. Its near-term focus will be on the Sunbelt region and areas near its hometown of Chicago. Zooming out, this was an impressive quarter that should delight shareholders.
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What is the market telling us:
Portillo's's shares are quite volatile and over the last year have had 11 moves greater than 5%. But moves this big are very rare even for Portillo's and that is indicating to us that this news had a significant impact on the market's perception of the business.
Portillo's is up 2.6% since the beginning of the year, but at $16.02 per share it is still trading 32.6% below its 52-week high of $23.77 from July 2023. Investors who bought $1,000 worth of Portillo's's shares at the IPO in October 2021 would now be looking at an investment worth $550.86.
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