Since April 2026, El Pollo Loco has been in a holding pattern, posting a small return of 1.6% while floating around $14.24. The stock also fell short of the S&P 500’s 15.2% gain during that period.
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Why Do We Think El Pollo Loco Will Underperform?
We’re passing on El Pollo Loco for now. Here are three reasons why there are better opportunities than LOCO, plus one stock we’d rather own.
1. Same-Store Sales Falling Behind Peers
Same-store sales show the change in sales at restaurants open for at least a year. This is a key performance indicator because it measures organic growth.
El Pollo Loco’s demand within its existing dining locations has been relatively stable over the last two years but was below most restaurant chains. On average, the company’s same-store sales have grown by 1.7% per year.
2. Fewer Distribution Channels Limit Its Ceiling
With $500.8 million in revenue over the past 12 months, El Pollo Loco is a small restaurant chain, which sometimes brings disadvantages compared to larger competitors benefiting from better brand awareness and economies of scale.
3. Projected Revenue Growth Is Slim
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect El Pollo Loco’s revenue to rise by 2.3%, close to its 1.8% annualized growth for the past seven years. This projection is underwhelming and implies its newer menu offerings will not lead to better top-line performance yet.
Final Judgment
El Pollo Loco doesn’t pass our quality test. With its shares trailing the market in recent months, the stock trades at 14.1× forward P/E (or $14.24 per share). While this valuation is reasonable, we don’t see a big opportunity at the moment. There are better stocks to buy right now. Let us point you toward the most dominant software business in the world.
Stocks We Would Buy Instead of El Pollo Loco
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