Core Insights - The consumer discretionary sector has several oversold stocks, presenting potential buying opportunities for undervalued companies [1][2] Group 1: Oversold Stocks - Portillos Inc (NASDAQ: PTLO) has an RSI of 29.9, with a stock price decline of approximately 22% over the past month, reaching a 52-week low of $4.64 [8] - Unifi Inc (NYSE: UFI) has an RSI of 29.7, with a stock price drop of around 20% in the last month, hitting a 52-week low of $3.58 [8] - Brinker International Inc (NYSE: EAT) has an RSI of 29.3, despite reporting strong quarterly earnings, its stock fell about 18% over the past month, with a 52-week low of $100.30 [8]

Core Insights - Portillo's, a Chicago-based fast-casual restaurant, has been facing challenges, particularly with its expansion into Texas, leading to poor financial results in 2025 [1] Company Performance - The company's price-to-book ratio has declined, indicating potential valuation concerns [1] Expansion Challenges - The attempt to expand into Texas has not yielded the expected results, contributing to the overall struggles of the restaurant [1]

Financial Data and Key Metrics Changes - Revenues for Q3 2025 were $181.4 million, reflecting an increase of $3.2 million or 1.8% compared to the previous year [14] - Same restaurant sales declined by 0.8%, resulting in a revenue decrease of approximately $1.2 million for the quarter [15] - Restaurant level adjusted EBITDA decreased by $5.3 million to $36.7 million, with adjusted EBITDA margins decreasing to 20.2% from 23.5% in the prior year [18][19] - Adjusted EBITDA for the quarter was $21.4 million, a decrease of 23.4% from the prior year [21] - Cash from operations decreased by 32.3% year over year to $48.7 million year to date [23] Business Line Data and Key Metrics Changes - Non-comp restaurants contributed $5.6 million to the total year-over-year revenue increase during the quarter [14] - The company experienced a 2.2% decrease in transactions, partially offset by a 1.4% increase in average check [15] - Food, beverage, and packaging costs as a percentage of revenues increased to 34.5% from 33.7% in the prior year, primarily due to a 6.3% increase in commodity prices [16] Market Data and Key Metrics Changes - The company plans to open eight restaurants in 2026, with several already in progress [37] - The company is focusing on new market entries and has plans for gradual growth in 2027, particularly in Atlanta and other growth opportunities [39] Company Strategy and Development Direction - The company announced a strategic reset, slowing development in 2025 and 2026 to focus on delivering an outstanding guest experience [7] - The development strategy will reflect a more gradual pace to avoid cannibalization and allow for better customer experiences [11] - The company is leveraging its Portillo's Perks loyalty program to stimulate visits, especially in new markets [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth potential, citing strong customer demand in new markets [5] - The company is addressing low-volume restaurants and working to improve trial and labor efficiency at these locations [10] - Management noted that the operating environment remains fluid, with pressures from inflation and consumer behavior impacting performance [58] Other Important Information - The company recorded a non-cash impairment charge of $2.2 million related to its legacy Barnelli's trade name [20] - The effective tax rate for the third quarter was impacted by a decrease in the valuation allowance, with an expected full-year tax rate of approximately 21% to 23% [23] Q&A Session Summary Question: Marketing efficacy and strategy moving forward - Management acknowledged the need to drive trial and awareness in newer markets and emphasized ongoing marketing investments in both new and core markets [28][30] Question: Pricing strategy and value perception - Management indicated that current pricing is below industry inflation rates and emphasized the importance of driving traffic into restaurants [32] Question: Development plans for 2026 and beyond - Management confirmed plans to open eight restaurants in 2026, with a focus on gradual growth and avoiding oversaturation in existing markets [37][39] Question: Commodity cost outlook - Management noted ongoing pressures on beef costs and projected labor inflation of 3% to 4% for the year, with no significant geographical concentration in wage increases [44][46] Question: Consumer behavior trends - Management did not observe notable shifts in consumer behavior by demographic cohorts but acknowledged pressures in the drive-thru channel [62]

Financial Data and Key Metrics Changes - Revenues for Q3 2025 were $181.4 million, an increase of $3.2 million or 1.8% year-over-year, driven by non-comparable restaurants [13] - Same restaurant sales declined by 0.8%, resulting in a revenue decrease of approximately $1.2 million, attributed to a 2.2% decrease in transactions, partially offset by a 1.4% increase in average check [13] - Restaurant-level Adjusted EBITDA decreased by $5.3 million to $36.7 million, with margins dropping 330 basis points to 20.2% [17] - Adjusted EBITDA was $21.4 million, a decrease of 23.4% from the prior year [19] - Cash from operations decreased by 32.3% year-over-year to $48.7 million year-to-date [20] Business Line Data and Key Metrics Changes - The company experienced pressures on margins from non-comparable restaurants, with restaurant-level Adjusted EBITDA margins estimated to be in the range of 21%-21.5% for 2025 [17] - Other operating expenses increased by $2.3 million or 10.8% compared to the prior year, primarily due to new restaurant openings and increased repair and maintenance costs [15] Market Data and Key Metrics Changes - The company plans to open eight restaurants in 2026, with a focus on gradual growth and avoiding cannibalization in existing markets [31] - The company is leveraging affiliate marketing and catering to expand reach in new markets [10] Company Strategy and Development Direction - The company announced a strategic reset, slowing development in 2025 and 2026, and focusing on delivering an outstanding guest experience [6][7] - A smaller-format restaurant model is being deployed to achieve good unit economics with sales of $4 million to $5 million [9] - The company aims to drive more transactions through its unique menu offerings and the Portillo's Perks Loyalty Program [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth potential, citing strong customer demand in new markets [4] - The company anticipates commodity inflation of 3%-5% in 2025, with significant pressures coming from beef prices [14][35] - The effective tax rate for the full year is expected to be approximately 21%-23% [20] Other Important Information - The company recorded a non-cash impairment charge of $2.2 million related to the Barnelli's trade name [18] - The company ended the quarter with $17.2 million in cash and $323 million in total net debt [20] Q&A Session Summary Question: Marketing efficacy and strategy moving forward - Management acknowledged the need to drive trial and awareness in newer markets and emphasized ongoing marketing investments in both new and core markets [22][24] Question: Pricing strategy and value perception - Management indicated that current pricing is below industry inflation rates and emphasized the importance of driving traffic into restaurants [26][27] Question: Development plans for 2026 - Management confirmed plans to open eight restaurants in 2026, with a focus on gradual growth and potential expansion in new markets [30][31] Question: Commodity costs and labor inflation - Management noted ongoing pressures on beef costs and confirmed labor inflation guidance of 3%-4% for the year [33][35] Question: Consumer behavior and marketing efforts in Texas - Management reported no noticeable shifts in consumer behavior by demographic cohorts but emphasized focused marketing efforts in Texas to drive brand awareness [45][48]

Core Insights - Portillo's Inc. reported quarterly earnings of $0.02 per share, missing the Zacks Consensus Estimate of $0.04 per share, and down from $0.11 per share a year ago, representing an earnings surprise of -50.00% [1] - The company posted revenues of $181.43 million for the quarter ended September 2025, missing the Zacks Consensus Estimate by 1.46%, and up from $178.25 million year-over-year [2] - Portillo's shares have declined approximately 44.3% year-to-date, contrasting with the S&P 500's gain of 16.5% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.04 on revenues of $188.43 million, and for the current fiscal year, it is $0.26 on revenues of $737.42 million [7] - The estimate revisions trend for Portillo's Inc. was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Retail - Restaurants industry, to which Portillo's belongs, is currently ranked in the bottom 14% of over 250 Zacks industries, suggesting a challenging environment for stocks in this sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor sentiment and stock performance [5]

Q3 2025 Performance - Total revenue for Q3 2025 reached $181.4 million[9], representing a 1.8% increase[9] - Operating income for Q3 2025 was $5.4 million[9] - Adjusted EBITDA for Q3 2025 amounted to $21.4 million[9] - Restaurant-Level Adjusted EBITDA for Q3 2025 was $36.7 million[9] - Net income for Q3 2025 was $0.8 million[9] Q3 YTD 2025 Performance - Total revenue for Q3 YTD 2025 reached $546.3 million[14], showing a 3.9% growth[13] - Operating income for Q3 YTD 2025 was $33.3 million[16] - Adjusted EBITDA for Q3 YTD 2025 amounted to $72.7 million[16] - Restaurant-Level Adjusted EBITDA for Q3 YTD 2025 was $117.8 million[16] - Net income for Q3 YTD 2025 was $14.8 million[16] Fiscal 2025 Financial Targets - The company expects revenue between $730 million and $733 million[19] - The company plans to open 8 new restaurants[17, 19]

Financial Performance - Total revenues for the quarter ended September 28, 2025, were $181.4 million, an increase of 1% compared to $178.3 million for the same quarter in 2024[17] - Net income attributable to Portillo's Inc. for the quarter was $1.2 million, down from $7.2 million in the same quarter last year, representing a decrease of 83%[17] - The company reported a loss before income taxes of $465,000 for the quarter, compared to income before income taxes of $11.3 million in the same quarter last year[17] - Basic net income per common share attributable to Portillo's Inc. was $0.02 for the quarter, down from $0.12 in the same quarter last year[17] - Net income for the three quarters ended September 28, 2025, was $14,815,000, a decrease of 34.8% compared to $22,647,000 for the same period in 2024[22] - Operating cash flow for the three quarters ended September 28, 2025, was $48,741,000, down from $71,954,000 in the prior year, reflecting a decline of 32.2%[22] - Net income for the quarter ended September 28, 2025, was $0.8 million, compared to $8.8 million for the same quarter in 2024, representing a decline of 90.9%[100] - For the three quarters ended September 28, 2025, net income was $14.8 million, down from $22.6 million for the same period in 2024, a decrease of 34.5%[100] Assets and Liabilities - Total current assets decreased to $50.1 million as of September 28, 2025, from $52.7 million as of December 29, 2024[16] - Total assets increased to $1.59 billion as of September 28, 2025, compared to $1.50 billion as of December 29, 2024[16] - Total liabilities rose to $1.10 billion as of September 28, 2025, from $1.01 billion as of December 29, 2024[16] - Total stockholders' equity increased to $488,400,000 as of September 28, 2025, compared to $477,592,000 as of September 29, 2024, representing a growth of 2.7%[21] - Total liabilities under the Tax Receivable Agreement decreased by $16,248,000 due to adjustments in deferred tax assets associated with increases in tax basis[21] - The company estimated its obligation for future payments under the Tax Receivable Agreement (TRA) liability to be $353.2 million as of September 28, 2025[92] Expenses - Restaurant operating expenses for the quarter were $144.7 million, an increase of 6% from $136.3 million in the same quarter last year[17] - The company experienced a 10% increase in food, beverage, and packaging costs, totaling $62.6 million for the quarter[17] - The company reported depreciation and amortization expenses of $21,489,000 for the three quarters ended September 28, 2025, compared to $20,729,000 in the previous year, indicating a rise of 3.7%[22] - The company incurred equity-based compensation expenses of $4,288,000 for the three quarters ended September 28, 2025, compared to $9,223,000 in the prior year, a reduction of 53.5%[22] - The company recorded interest paid of $17,326,000 for the three quarters ended September 28, 2025, compared to $13,010,000 for the same period in 2024, reflecting an increase of approximately 33%[24] - Total interest expense for the quarter ended September 28, 2025, was $5.7 million, compared to $6.5 million for the same quarter in 2024[76] Investments and Capital Expenditures - The company invested $58,097,000 in property and equipment during the three quarters ended September 28, 2025, compared to $56,514,000 in the same period last year, reflecting an increase of 2.8%[22] - As of September 28, 2025, total property and equipment, net amounted to $407.3 million, an increase of 13.4% from $359.0 million as of December 29, 2024[52] - The company entered into a joint venture to develop a restaurant at Dallas-Fort Worth International Airport, expected to commence operations in 2026, with a 65% ownership interest[28] - The company capitalized deferred financing costs and issuance discounts of $1.3 million under the 2025 Credit Agreement[74] Operational Changes - The company is actively searching for a new Chief Executive Officer, which may impact future operations and strategy[13] - The company launched Portillo's Perks™, a visit-based loyalty program, on March 3, 2025[49] - The company recognized a non-cash impairment charge of $2.2 million related to its legacy Barnelli's trade name during the quarter ended September 28, 2025[37] - The company recognized trade name impairment charges of $2.2 million during the quarter ended September 28, 2025, with no impairment of goodwill reported[53] Shareholder Information - The weighted average ownership percentage for pre-IPO LLC Members was 4.6% for the quarter ended September 28, 2025, down from 15.8% in the same quarter of the previous year[82] - Portillo's Inc. reported a total of 75,366,495 LLC Units outstanding as of September 28, 2025, with 95.4% owned by Portillo's Inc.[81] - Berkshire Partners LLC and its affiliates beneficially own approximately 5.2% of the Company as of September 28, 2025, following the redemption of 7,290,465 LLC units for Class A common stock[108] Legal Matters - A class action lawsuit was filed alleging wage and hour violations, with a loss considered reasonably possible but not estimable, resulting in no litigation reserve recorded[98] Miscellaneous - No guest accounts for 10% or more of the Company's revenues, indicating a diversified revenue stream[103] - The Company has one operating segment and one reportable segment, as assessed by the Chief Operating Decision Maker[99]

Core Insights - Portillo's Inc. reported a revenue increase of 1.8% to $181.4 million for Q3 2025 compared to $178.3 million in Q3 2024, driven by new restaurant openings despite a decline in same-restaurant sales [4][9][10] - The company experienced a significant decrease in net income, which fell by 91.1% to $0.8 million from $8.8 million in the previous year, primarily due to increased operating expenses and impairment charges [8][9][10] - Adjusted EBITDA decreased by 23.4% to $21.4 million, reflecting challenges in maintaining profitability amid rising costs and a competitive market [10][9] Financial Performance - Total revenues for Q3 2025 were $181.4 million, up $3.2 million or 1.8% from Q3 2024 [4][9] - Same-restaurant sales decreased by 0.8%, attributed to a 2.2% drop in transactions, partially offset by a 1.4% increase in average check [4][9] - Total restaurant operating expenses rose by 6.2% to $144.7 million, driven by new restaurant openings and a 6.3% increase in commodity prices [5][9] - General and administrative expenses increased by 9.4% to $20.0 million, largely due to dead site costs [6][9] Operational Highlights - The company opened four new restaurants in Q3 2025, bringing the total to 99, with plans for three more openings in Q4 2025 [11][12] - Portillo's introduced a new in-line restaurant format, with future openings focusing on a smaller prototype designed for efficiency [12][11] - The company aims to open a total of eight new restaurants in fiscal 2025 [14] Financial Targets - Management updated fiscal 2025 targets, projecting revenues between $730 million and $733 million, with same-restaurant sales expected to decline by 1% to 1.5% [14] - Adjusted EBITDA is targeted between $90 million and $94 million, with capital expenditures estimated at $97 million to $100 million [14]

Core Insights - Portillo's Inc. (PTLO) is expected to report a year-over-year decline in earnings despite higher revenues for the quarter ended September 2025, with a consensus EPS estimate of $0.04, reflecting a decrease of 63.6% [1][3] - The anticipated revenue for the same quarter is $184.12 million, which represents a 3.3% increase from the previous year [3] - The earnings report is scheduled for November 4, and the actual results will significantly influence the stock price, depending on whether they meet or exceed expectations [2] Earnings Estimates and Revisions - The consensus EPS estimate has been revised down by 33.33% over the last 30 days, indicating a bearish sentiment among analysts regarding the company's earnings prospects [4] - Portillo's has an Earnings ESP of -25.00%, suggesting that the Most Accurate Estimate is lower than the Zacks Consensus Estimate, making it challenging to predict an earnings beat [12] Historical Performance - In the last reported quarter, Portillo's met the expected EPS of $0.12, resulting in no surprise [13] - Over the past four quarters, the company has beaten consensus EPS estimates three times [14] Industry Context - In the Zacks Retail - Restaurants industry, El Pollo Loco Holdings (LOCO) is expected to post earnings of $0.23 per share for the same quarter, indicating a year-over-year increase of 9.5% [18] - El Pollo Loco's revenue is projected to be $123.51 million, up 2.6% from the previous year, but it also has a negative Earnings ESP of -2.22% and a Zacks Rank of 4, indicating difficulty in predicting an earnings beat [19][20]

Core Viewpoint - The article critiques the speculative nature of quantum computing stocks, particularly IonQ, while highlighting the potential of companies like Remitly Global and Portillo's that are currently creating value in the market [2][12]. Group 1: Quantum Computing Stocks - IonQ has seen a significant increase in stock price, up hundreds of percent in the last year, reaching a market cap of $25 billion despite generating less than $100 million in revenue [2]. - The company is characterized as highly speculative with little to no viable business model, making it a risky investment [2][12]. Group 2: Remitly Global - Remitly has experienced a 34% year-over-year revenue growth last quarter, with a 40% increase in send volume, indicating strong performance despite concerns over immigration policies affecting cross-border payments [6][5]. - The company generated $1.46 billion in trailing revenue with an EBIT of $27 million, showcasing its path to profitability and operational leverage compared to IonQ's significant losses [7]. - Remitly is positioned to capture market share from traditional players due to its low fees and user-friendly mobile application [6]. Group 3: Portillo's - Portillo's is expanding its restaurant chain into new markets like Texas and Florida, despite facing challenges from a slowdown in consumer spending [8]. - The company reported a modest 3.6% annual revenue growth, with plans for significant expansion in the coming years as new store openings are scheduled for the latter half of 2025 [9]. - Portillo's generated $65 million in EBIT on $728 million in revenue over the last 12 months, contrasting sharply with IonQ's $53 million in revenue and $351 million in losses [11].