Biglari entities snap up $4.5 million in El Pollo Loco shares

Investors following the activities of Biglari Holdings Inc. and its related entities might note a recent flurry of stock purchases in El Pollo Loco Holdings, Inc. (NASDAQ:LOCO). Over a series of transactions, various Biglari entities acquired a total of $4,543,235 worth of El Pollo Loco’s common stock. The buying spree took place between August 14 and August 22, 2024, with prices ranging from $12.47 to $13.59 per share.

The bulk buying was spearheaded by Biglari Reinsurance Ltd., which is a subsidiary of Biglari Insurance Group Inc., itself a subsidiary of Biglari Holdings Inc. The transactions were spread over several days, with the largest single-day purchase amounting to 100,000 shares at an average price of $13.42. This particular transaction alone infused approximately $1,342,000 into El Pollo Loco Holdings.

The series of purchases began on August 14, with 62,362 shares bought at an average price of $12.47. The subsequent transactions saw prices inching higher, reflecting a market that was perhaps responding to the aggressive buying pattern. By August 22, the price per share had increased to an average of $13.48 for a smaller batch of 4,516 shares.

These transactions have increased the indirect holdings of Sardar Biglari, Chairman and Chief Executive Officer of Biglari Holdings Inc., who, through the complex ownership structure, may be deemed to beneficially own the shares acquired by Biglari Reinsurance Ltd. This intricate web of ownership also includes The Lion Fund II, L.P., and First Guard Insurance Company, which hold significant stakes in El Pollo Loco Holdings as well.

Investors and followers of El Pollo Loco Holdings will be watching closely to see how these substantial investments by Biglari entities will play out in the market and what it could signal for the company’s future.

In other recent news, El Pollo Loco Holdings, Inc. has announced a slight rise in total revenue for the second quarter of 2024, reaching $122.2 million, a 0.6% increase. This growth was attributed to a 4.5% surge in system-wide comparable restaurant sales. Although company-operated restaurant revenue saw a decrease due to refranchising, franchise revenue experienced a significant boost, growing by 15.1%.

El Pollo Loco is also making strategic moves, including digital-first initiatives and national expansion, and has seen restaurant-level margins improve by 170 basis points. The company is committed to reducing build costs for new units and enhancing labor productivity to manage the expected wage inflation of 12-13% for company-owned locations in 2024.

However, the rollout of kiosks has been delayed, with completion now aimed for the end of the year. The company reported a GAAP net income of $7.6 million and an adjusted net income of $7.8 million. These are the latest developments in the company’s ongoing efforts to drive growth and improve operational efficiency.

InvestingPro Insights

As Biglari Holdings Inc. expands its stake in El Pollo Loco Holdings, Inc. (NASDAQ:LOCO), a closer look at recent metrics and InvestingPro Tips can provide a deeper understanding of the company’s performance and potential. El Pollo Loco’s market capitalization stands at a solid $407.32 million, and the stock is trading at a P/E ratio of 15.8, which could indicate a reasonable valuation compared to its near-term earnings growth.

An InvestingPro Tip highlights that management has been aggressively buying back shares, a move that can signal confidence in the company’s value and future prospects. Additionally, with two analysts revising their earnings upwards for the upcoming period, there seems to be a positive sentiment around the company’s financial outlook.

Key InvestingPro Data metrics to consider include a P/E ratio of 16.18 for the last twelve months as of Q2 2024 and a PEG ratio of 0.48, suggesting that the stock might be undervalued relative to its earnings growth. The company is also trading near its 52-week high, with its price at 98.49% of this peak, reflecting a significant price uptick over the last six months. These data points, coupled with a strong return of 31.35% over the last three months, paint a picture of a company that has been performing well in the stock market recently.

For those interested in more detailed analysis, there are additional InvestingPro Tips available on https://www.investing.com/pro/LOCO, which provide further insights into El Pollo Loco’s stock performance and financial health.

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