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Analysts Expect Portillo's Inc. (NASDAQ:PTLO) To Breakeven Soon

With the business potentially at an important milestone, we thought we'd take a closer look at Portillo's Inc.'s (NASDAQ:PTLO) future prospects. Portillo’s Inc. owns and operates fast casual and quick service restaurants in the United States. With the latest financial year loss of US$54m and a trailing-twelve-month loss of US$51m, the US$1.5b market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Portillo's' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Portillo's

Portillo's is bordering on breakeven, according to the 10 American Hospitality analysts. They expect the company to post a final loss in 2021, before turning a profit of US$9.5m in 2022. Therefore, the company is expected to breakeven roughly 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 60% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of Portillo's' upcoming projects, though, take into account that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. Portillo's currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Portillo's' case is 72%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of Portillo's to cover in one brief article, but the key fundamentals for the company can all be found in one place – Portillo's' company page on Simply Wall St. We've also put together a list of important aspects you should further examine:

  1. Valuation: What is Portillo's worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Portillo's is currently mispriced by the market.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Portillo's’s board and the CEO’s background.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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