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1. Company Snapshot

1.a. Company Description

Portillo's Inc., together with its subsidiaries, engages in the ownership and operation of fast casual and quick service restaurants in the United States.The company offers Chicago-style hot dogs and sausages, Italian beef sandwiches, char-grilled burgers, chopped salads, crinkle-cut French fries, homemade chocolate cakes, and chocolate cake shakes.As of March 10, 2022, it operated in 70 locations across nine states.


The company also offers its products through its website.Portillo's Inc.was founded in 1963 and is based in Oak Brook, Illinois.

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1.b. Last Insights on PTLO

The recent performance of Portillo's Inc. has been negatively impacted by a downgrade to Neutral from Outperform at Baird, citing rising economic slowdown probabilities. The firm lowered estimates and price targets for the restaurants, with a preference for franchisors. Additionally, the company's same-store sales growth has slowed, and the stock has fallen 78% from its all-time highs. The upcoming first quarter 2025 earnings release on May 6, 2025, may provide further insight into the company's performance.

1.c. Company Highlights

2. Portillo's Q3 2025 Earnings: A Mixed Bag

In the third quarter, Portillo's revenues reached $181.4 million, a 1.8% increase compared to the same period last year, driven by non-comp restaurants. The same-restaurant sales, however, declined by 0.8%, resulting in a revenue decrease of approximately $1.2 million. The adjusted EBITDA was $21.4 million, a 23.4% decrease from $27.9 million in the prior year. The earnings per share (EPS) came out at $0.02, missing estimates of $0.04.

Publication Date: Nov -18

📋 Highlights
  • Revenue Growth:: Q3 revenue reached $181.4 million, a 1.8% increase YoY driven by $5.6 million from non-comp restaurants.
  • Same-Store Sales Decline:: Same-restaurant sales dropped 0.8%, reducing revenue by $1.2 million, offset by a 3.2% average check increase.
  • Cost Pressures:: Food, beverage, and packaging costs rose to 34.5% of revenue (vs. 33.7% prior year) due to 6.3% commodity price hikes.
  • Labor Costs:: Labor expenses increased to 26.6% of revenue (vs. 25.8% prior year), driven by lower transactions and incremental wage raises.
  • Adjusted EBITDA Decline:: Q3 adjusted EBITDA fell to $21.4 million from $27.9 million YoY (-23.4%), with full-year guidance revised to $90–94 million.

Revenue Growth Drivers

The revenue growth in the quarter was driven by non-comp restaurants, which contributed $5.6 million to the total year-over-year increase in revenue. The higher average check, driven by a 3.2% increase in certain menu prices, was partially offset by a 1.8% decrease in product mix. As Mike Miles noted, "We're focusing on driving more transactions," highlighting the importance of the Portillo's experience, including its unique menu and genuine hospitality.

Margin Pressures

Food, Beverage, and Packaging costs as a percentage of revenues increased to 34.5% in the quarter from 33.7% in the prior year, primarily due to a 6.3% increase in commodity prices. Labor costs as a percentage of revenues also rose to 26.6% from 25.8% in the prior year, driven by lower transactions, incremental wage increases, and higher benefit costs.

Guidance and Outlook

Portillo's adjusted EBITDA guidance for fiscal year 2025 is now $90 million to $94 million. The company plans to slow down development, limiting openings in 2025 and 2026 to sites with already signed leases. For next year, analysts estimate revenue growth at 6.6%. The company's pricing strategy is expected to be revisited in relation to inflationary cost pressures.

Valuation Metrics

With a P/E Ratio of 10.3 and an EV/EBITDA of 9.87, the market seems to be pricing in moderate growth expectations. The P/S Ratio stands at 0.46, indicating a relatively reasonable valuation considering the revenue growth prospects. However, the Net Debt / EBITDA ratio of 6.38 may raise concerns about the company's leverage.

3. NewsRoom

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Portillo's Launches Season of Surprises Holiday Promotion Throughout December

Dec -04

Source: globenewswire.com

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First Eagle Small Cap Opportunity Fund Q3 2025 Portfolio Review

Nov -20

Source: seekingalpha.com

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Alger SICAV - Alger Small Cap Focus Fund Q3 2025 Portfolio Update

Nov -16

Source: seekingalpha.com

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Portillo's Selloff Is Likely To End Soon

Nov -09

Source: seekingalpha.com

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6 Impressive Stocks That Powered AI, Partnerships, And Performance Gains

Nov -07

Source: seekingalpha.com

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Portillo's Inc. (PTLO) Q3 2025 Earnings Call Transcript

Nov -04

Source: seekingalpha.com

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Portillo's Inc. (PTLO) Misses Q3 Earnings and Revenue Estimates

Nov -04

Source: zacks.com

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Portillo’s Inc. (NASDAQ:PTLO) Given Consensus Recommendation of “Hold” by Analysts

Oct -30

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (11.00%)

6. Segments

Fast-casual Restaurants

Expected Growth: 11%

Portillo's Inc.'s fast-casual restaurants' 11% growth is driven by increasing demand for convenient, high-quality food, expansion into new markets, and strategic menu innovation. Additionally, the brand's strong reputation, efficient operations, and effective marketing strategies contribute to its growth. Furthermore, the rising popularity of online ordering and delivery also boosts sales.

7. Detailed Products

Chicago-Style Hot Dogs

Portillo's signature hot dogs made with all-beef franks served on a poppy seed bun

Italian Beef Sandwiches

Thinly sliced roast beef served in a crusty roll with au jus for dipping

Chocolate Cake

Moist and decadent chocolate cake made with the finest ingredients

French Fries

Thick-cut fries cooked to a golden crisp, served hot and salty

Burgers

Juicy beef or chicken burgers topped with cheese, lettuce, tomato, and our signature sauce

Salads

Fresh mixed greens with a variety of toppings, including chicken, tuna, or veggies

Catering Services

Customizable catering options for events and parties, including hot dogs, sandwiches, and more

8. Portillo's Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Portillo's Inc. has a moderate threat of substitutes due to the presence of alternative fast-food chains and restaurants that offer similar menu items.

Bargaining Power Of Customers

Portillo's Inc. has a low bargaining power of customers due to its strong brand loyalty and customer retention.

Bargaining Power Of Suppliers

Portillo's Inc. has a moderate bargaining power of suppliers due to its dependence on a few key suppliers for ingredients and materials.

Threat Of New Entrants

Portillo's Inc. has a high threat of new entrants due to the relatively low barriers to entry in the fast-food industry and the increasing popularity of meal kit delivery services.

Intensity Of Rivalry

Portillo's Inc. operates in a highly competitive fast-food industry with many established players, leading to a high intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 49.18%
Debt Cost 5.64%
Equity Weight 50.82%
Equity Cost 13.27%
WACC 9.52%
Leverage 96.78%

11. Quality Control: Portillo's Inc. passed 0 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Yield: 0.0

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A-Score: 3.6/10

Value: 8.1

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Quality: 4.1

Yield: 0.0

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Volatility: 3.3

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

-2.1$

Current Price

4.84$

Potential

-143.47%

Expected Cash-Flows