bhofack2
Portillo’s (NASDAQ:PTLO) shares have fallen 40% year-to-date and are now off 55% over the past year. Investors have fled the stock following a disappointing first quarter earnings report, concern over consumer spending, and persistent selling by private equity firm Berkshire Partners (not affiliated with Berkshire Hathaway) since the IPO.
While 1Q numbers weren’t great, at today’s price, I see little fundamental downside in Portillo’s shares (discussed below) and think investors are overlooking some important positives, notably:
- Loyal core customer base in Chicagoland which provides some competitive insulation should price competition increase
- Operational improvements from kitchen reconfiguration & opportunities to reduce front of store costs through kiosks
- Continued restaurant expansion opportunity in sunbelt markets – new restaurant footprints have been optimized to improve returns on capital
- Approaching end of…
