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Why Investors May Still Find an Appetite for El Pollo Loco


El Pollo Loco (LOCO - Get Report) reported first-quarter results Thursday afternoon that showed earnings per share uncharacteristically missed forecasts, sending the company's already beleaguered share price more 15% lower in Friday.

El Pollo, the owner, operator and franchisor of Mexican styled chicken restaurants, recorded 17 cents a share in its first quarter EPS, falling short of forecasts of 18 cents a share. Granted, it's just a penny a share of a miss, but at these relatively modest levels, a mere cent amounts to almost 7%.

It marked something of a departure for the company, which has been struggling with several trends the last year of its operation, though it beat earnings forecasts for each quarter of last year.

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Analysts remain constructive on the outlook for the restaurant chain. Jefferies, in a note Friday, maintained its $17 price target, saying that the results reflected some near-term bumps, but that the quarter continued to show signs of improvement. Same store sales growth was fractionally higher than had been expected, with traffic trends at the start of the second quarter showing improvement, the firm said. The company seems to be putting some prior marketing missteps further in its past, Jefferies...