Why Portillo's Stock Skyrocketed Tuesday Morning

Shares of Portillo's (NASDAQ: PTLO) took flight Tuesday morning, jumping as much as 18.9%. As of 1:18 p.m. ET, the stock was still up 13.3%.

The catalyst that sent the fast-casual restaurant stock higher was the company's preliminary financial results, which were surprisingly robust.

Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »

Tasty results

Portillo's made a presentation at the ICR Conference this week, and the company provided preliminary results for the fourth quarter, which were much better than investors had feared. The biggest surprise was same-store sales, which increased 0.3% year over year, well ahead of analysts' consensus estimates of a 1.1% drop, and management's guidance, which implied a 0.8% decline.

At the same time, preliminary revenue of $184.6 million was ahead of the $184.4 million expected by analysts. Full-year preliminary revenue of $710.6 million increased 4.5% year over year, just below the $710.9 million expected by analysts.

Management also provided its internal forecast for 2025, guiding for same-store sales to increase roughly 1% year over year at the midpoint of its guidance, while forecasting revenue growth of approximately 11% and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to increase by about 7%.

It's the economy

The past couple of years have been difficult for restaurant stocks. Historically high inflation has jacked up food prices and labor costs, even as many consumers made tough choices to make ends meet.

As a result, restaurant traffic in the third quarter was down 3% year over year and 17% below Q3 2019, according to CREST Research. The combination of less foot traffic and higher input costs has weighed on restaurant results.

The fact that Portillo's was able to increase same-store sales -- even by a little -- gave investors cause to celebrate -- especially as there were much greater declines suffered by the rest of the industry.

Despite the difficult economy, Portillo's offers a compelling opportunity, selling for 24 times earnings, an intriguing multiple for a company that's outperforming its peers.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $345,467!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $44,391!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $453,161!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of January 13, 2025

Danny Vena has positions in Portillo's. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.