Value
7.8/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 7.5 |
| P/S | 9.7 |
| EV/EBITDA | 5.4 |
| Fwd P/E | 8.1 |
| PEG | 10.0 |
| Analyst target | 6.0 |
- ▸Forward P/E: 14.7x
- ▸PEG: 0.34
- ▸Attractively valued
LOCO · Why this verdict
Why El Pollo Loco Holdings (LOCO) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.9/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
El Pollo Loco has strung together a perfect four-quarter earnings beat streak and screens as attractively valued within a breakout technical setup, but the stock has already reached its price target with an unfavorable stated risk/reward and quality still sits just below the minimum floor.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company has beaten earnings estimates in each of its last four quarters, with an average surprise near 24%, a pattern the data calls a perfect beat streak. Catalyst breakdown | Continuing to beat estimates over the next several quarters would extend this streak and reinforce execution consistency. | →Stable |
| CounterQuality still screens just below the minimum threshold, suggesting the consistent beats have not yet been enough to lift the broader quality assessment. | ||
Quality screens just below the minimum threshold, with the data noting no competitive moat even as the Piotroski F-score reads a strong 7 out of 9. Quality breakdown | The quality score climbing back above the floor, or a moat score improving, would ease this concern. | →Stable |
| CounterA Piotroski F-score of 7 out of 9 already signals broadly healthy fundamentals, suggesting the quality gap versus the floor may be narrow and easily closed. | ||
Shares screen as attractively valued, trading at roughly 15.4x forward earnings with a PEG ratio near 0.36. Valuation breakdown | The valuation multiple holding near current levels or expanding modestly would support the value case continuing to hold. | ↑Improving |
| CounterThe stock has already reached its stated price target with only about 2.2% upside remaining to resistance, suggesting much of the value case may already be reflected in the price. | ||
The stock continues to show rising on-balance volume while trading above its 200-day moving average, consistent with the data's breakout setup featuring a golden cross and bullish MACD. Momentum breakdown | The stock holding above its 200-day moving average with continued volume accumulation would confirm the breakout is sustaining. | ↓Deteriorating |
| CounterThe engine's own asymmetry check fails at roughly -0.2, meaning the favorable technical setup has not translated into a favorable stated risk/reward at current prices. | ||
The stock has reached its stated price target with only about 2.2% upside remaining, and the engine's own asymmetry check fails at roughly -0.2, indicating the risk/reward has turned unfavorable near current levels. Warnings | A new, higher price target or a pullback restoring meaningfully positive upside would be needed for the asymmetry to turn favorable again. | →Stable |
| CounterMomentum remains strong, clearing its threshold at 6.7 within a breakout setup, which could support shares grinding to new highs and the target being revised upward. | ||
The company has beaten earnings estimates in each of its last four quarters, with an average surprise near 24%, a pattern the data calls a perfect beat streak.
→StableCatalyst breakdown
- Expectation
- Continuing to beat estimates over the next several quarters would extend this streak and reinforce execution consistency.
CounterQuality still screens just below the minimum threshold, suggesting the consistent beats have not yet been enough to lift the broader quality assessment.
Quality screens just below the minimum threshold, with the data noting no competitive moat even as the Piotroski F-score reads a strong 7 out of 9.
→StableQuality breakdown
- Expectation
- The quality score climbing back above the floor, or a moat score improving, would ease this concern.
CounterA Piotroski F-score of 7 out of 9 already signals broadly healthy fundamentals, suggesting the quality gap versus the floor may be narrow and easily closed.
Shares screen as attractively valued, trading at roughly 15.4x forward earnings with a PEG ratio near 0.36.
↑ImprovingValuation breakdown
- Expectation
- The valuation multiple holding near current levels or expanding modestly would support the value case continuing to hold.
CounterThe stock has already reached its stated price target with only about 2.2% upside remaining to resistance, suggesting much of the value case may already be reflected in the price.
The stock continues to show rising on-balance volume while trading above its 200-day moving average, consistent with the data's breakout setup featuring a golden cross and bullish MACD.
↓DeterioratingMomentum breakdown
- Expectation
- The stock holding above its 200-day moving average with continued volume accumulation would confirm the breakout is sustaining.
CounterThe engine's own asymmetry check fails at roughly -0.2, meaning the favorable technical setup has not translated into a favorable stated risk/reward at current prices.
The stock has reached its stated price target with only about 2.2% upside remaining, and the engine's own asymmetry check fails at roughly -0.2, indicating the risk/reward has turned unfavorable near current levels.
→StableWarnings
- Expectation
- A new, higher price target or a pullback restoring meaningfully positive upside would be needed for the asymmetry to turn favorable again.
CounterMomentum remains strong, clearing its threshold at 6.7 within a breakout setup, which could support shares grinding to new highs and the target being revised upward.
Per-dimension breakdown
Quality
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.4 |
| ROA | 3.4 |
| Gross margin | 0.6 |
| Op margin | 3.9 |
| Net margin | 2.9 |
| Current ratio | 1.4 |
| FCF quality | 6.3 |
| Moat | 5.0 |
| Piotroski F | 7.8 |
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
7.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.0 |
| EPS growth | 10.0 |
Momentum
3.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 8.1 |
| MACD | 0.2 |
| OBV | 1.0 |
| MA position | 6.0 |
| Volume | 0.0 |
- ▸Oversold in uptrend (RSI 28)
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.5 |
| Price target | 7.8 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (5.0) — signal dampened
- ▸Analyst upside: 21%
Insider
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 2.0 |
| insider conviction | 2.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Heavy insider selling — $3,887,384 (0.806% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.5 |
| quality rank | 5.0 |
| growth rank | 4.4 |
- ▸Attractive P/E vs peers
Technical
8.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 10.0 |
| support resistance | 9.8 |
| 52w position | 7.7 |
| gap | 6.0 |
Risk (lower is worse)
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.6 |
| days to cover | 5.7 |
| volatility | 5.6 |
| put call | 10.0 |
| implied vol | 2.4 |
| max pain risk | 3.0 |
| beta | 8.9 |
| debt equity | 6.4 |
- ▸High IV: 66%
- ▸Above max pain $14
- ▸Concentration risks: 3 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
- ▸Perfect beat streak: 4Q
- ▸Earnings in 14 days
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (3)
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:3.1<4.5
- ASYMMETRY:1.0<1.5@spot
- INSIDER:0.81%=EXTREME
Warning (2)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
- EARNINGS_PROXIMITY:14d<=14d (soft)
Reward-to-Risk
0.97
Upside
+5.4%
Downside
5.5%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeCatalyst-Driven — Earnings in 14d with 4/4 beat streak
SuitabilityAggressive — MCap $0.5B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects the MOMENTUM gate's 3.1<4.5 outcome against Technical at 8.4 and asymmetric R:R of 0.97.
The strongest dimensions are Technical at 8.4, Value at 7.8, and Catalyst at 7.5; the weakest are Momentum at 3.1, Quality at 3.9, and Insider at 5.2. The V9 engine flagged 3 failed gates with 2 warnings, producing an asymmetric reward-to-risk of 0.97 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Perfect Earnings Beat Streak
Trip ifEPS surprise falls below 0% (a miss) for 2 consecutive quarters.
- P2Attractive Valuation Low Peg
Trip ifForward P/E rises above 20x from the current 15.4x.
- P3Breakout Technical Setup
Trip ifThe stock falls below its 200-day moving average, reversing the current above-trend breakout position.
- P4Negative Asymmetry Target Reached
Trip ifThe risk/reward asymmetry ratio rises above 0 (turns positive) from the current -0.16.
- P5Below Floor Quality No Moat
Trip ifThe quality score rises above 4.0 from the current 3.9.