Here's Why You Should Retain Portillo's Stock in Your Portfolio Now

Portillo's Inc. PTLO is likely to benefit from technology adoption, real estate optimization and advertising campaigns. However, soft comps and elevated expenses are a concern.Growth Catalysts for PTLO StockPortillo's has effectively leveraged technology to enhance the customer experience. The rollout of kiosks across all its restaurants has shown early signs of success, with increased ticket sizes driven by higher attach rates for add ons. This frictionless ordering process is expected to yield measurable benefits in 2025, further solidifying the brand's operational efficiency.The company’s expansion strategy remains robust, with the opening of its first Houston restaurant receiving strong customer reception. PTLO plans to increase its restaurant count by 12-15% in 2025, supported by a refined prototype that reduces construction costs while maintaining customer appeal.Portillo's has resisted engaging in industry-wide price wars, focusing instead on delivering consistent value. This strategic decision, coupled with targeted advertising campaigns, positions the company to benefit in the medium and long term.The company emphasizes advertising efforts in new markets like Dallas-Fort Worth to boost traffic and brand recognition, reinforcing Portillo’s foothold in emerging regions.Concerns for Portillo's StockImage Source: Zacks Investment ResearchShares of Portillo's have declined 25.7% in the past three months compared with the industry’s 1.2% fall. The downside can be attributed to weak comparable sales and rising costs.Portillo’s reported a 0.9% decline in same-restaurant sales in the third quarter of 2024, driven by a 3.5% drop in transactions. The dip reflects increasing difficulty in attracting customers amid fierce competition in the fast-casual and quick-service restaurant sectors. The company’s decision to avoid aggressive discounting strategies, while prudent in the long term, has made it vulnerable in the short run as rivals attract budget-conscious diners with promotions. For the full year, Portillo’s expects negative comparable sales of approximately 1%, further highlighting its near-term struggles.The company has been bearing the brunt of high expenses for some time. During the third quarter, the company’s food, beverage and packaging costs (as a percentage of revenues) increased to 33.7% compared with 33.3% in the prior year period. This increase was primarily due to a 3.6% increase in commodity prices. Labor costs (as a percentage of revenues) increased 30 basis points year over year to 25.8%. For 2024, the company expects labor inflation at 3% and commodity inflation in the mid-single digits.Our ThoughtsWhile Portillo's faces short-term headwinds, its technology-driven initiatives, expansion strategy and focus on brand value position the company for sustained growth in the long term. Investors with a focus on steady, value-oriented strategies may find PTLO stock worth retaining, as its operational improvements and market penetration efforts could unlock significant upside in the future.PTLO’s Zacks Rank & Key PicksPortillo's currently carries a Zacks Rank #3 (Hold).Some better-ranked stocks in the Zacks Retail-Wholesale sector have been discussed below.Chipotle Mexican Grill, Inc. CMG presently carries a Zacks Rank #2 (Buy). CMG has a trailing four-quarter earnings surprise of 9.8%, on average. The stock has surged 34.8% in the past year. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.The consensus estimate for CMG’s 2025 sales and earnings per share (EPS) indicates growth of 12.8% and 17.9%, respectively, from the year-ago period’s levels.Brinker International, Inc. EAT presently carries a Zacks Rank #2. EAT has a trailing four-quarter earnings surprise of 12.1%, on average. The stock has surged 222.5% in the past year.The consensus estimate for EAT’s fiscal 2025 sales and EPS indicates growth of 9.3% and 44.2%, respectively, from the year-ago period’s levels.Shake Shack Inc. SHAK currently carries a Zacks Rank of 2. SHAK has a trailing four-quarter earnings surprise of 18.3%, on average. The stock has gained 89.6% in the past year.The Zacks Consensus Estimate for SHAK’s 2025 sales and EPS indicates a rise of 14.7% and 42%, respectively, from the year-ago period’s levels.Just Released: Zacks Top 10 Stocks for 2024Hurry – you can still get in early on our 10 top tickers for 2025. Handpicked by Zacks Director of Research Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2025. You can still be among the first to see these just-released stocks with enormous potential. See New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Chipotle Mexican Grill, Inc. (CMG): Free Stock Analysis Report Brinker International, Inc. (EAT): Free Stock Analysis Report Shake Shack, Inc. (SHAK): Free Stock Analysis Report Portillo's Inc. 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