While Portillo’s (NASDAQ:PTLO) is a popular dining destination for many, its latest earnings result wasn’t anywhere near so palatable. Investors got serious indigestion trying to swallow it and left Portillo’s stock down over 11% at the time of writing.
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On the surface, the news should have been much better. Portillo’s posted earnings of -$0.01 per share, which was below analyst expectations of $0.02 per share. Revenue was up 16% over the same time the previous year, coming in at $156.06 million. However, it wasn’t enough to wow analysts, who were looking for $156.29 million. The rest of Portillo’s numbers looked fairly good; same-restaurant sales were up 9.1%, and operating income was up $1.7 million, hitting a grand total of $8.5 million.
However, rising costs in both supplies and labor sent operating expenses up substantially. Worse, Portillo’s customers—hit by rising costs themselves—weren’t able to absorb all those costs themselves. Portillo’s isn’t taking this lying down, though; it has a new burger in the wings, recently bringing out the “Rodeo Burger,” which features onion rings, barbecue sauce, and “new, thicker and crispier bacon.” Plus, it’s also planning an expansion into airports as well as some locations that are pick-up only, among other things.
Further, analysts are certainly on Portillo’s side here. With five Buy ratings and just one Hold, Portillo’s stock is considered a Strong Buy. Further, it offers 35.59% upside potential thanks to its average price target of $28.
