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Chicago-style restaurant chain by Portillo (NASDAQ:PTLO) is known for serving hot dogs, sandwiches, burgers, fries, milkshakes and more. Not so long ago the company went public and PTLO shares have become available for trading.

Source: TonelsonProductions /

Make no mistake, this is by no means a new business. In fact, Portillo’s was founded in 1963 in a small trailer, which Dick Portillo called The Dog House.

Fast forward to June 27, 2021, when Portillo owned and operated 67 restaurants in nine states. This business is an ongoing growth story and as we will see Portillo’s is an impressive revenue generator as well.

Admittedly, the most recent financial results were not perfect. Still, there are a few positive data points on the menu and while Portillo’s won’t appeal to everyone, it offers a unique, branded experience.

A closer look at PTLO actions

By mid-October, Portillo’s stock offering was expected to have a price range of $ 17 to $ 20.

Then, the initial public offering (IPO) took place on October 21 after Portillo decided to set it at $ 20 per share.

However, retail traders were unlikely to have been able to buy the shares at this price as the shares started trading at $ 26.10.

Thus, the PTLO share was already up on its first day of public listing.

The momentum then continued into October and November, with Portillo’s share price hitting $ 57.72 on November 17.

Who would have known that the stock of a small restaurant chain could double in such a short time?

Most likely, this is a symptom of the IPO mania that has gripped the financial markets lately.

In particular, the PTLO share fell on November 18 and 19 to the $ 45 zone. This was obviously caused by a publication of results, which we will analyze momentarily.

Obsessed fans

Before we delve into the financials, however, we should take a step back and consider what makes Portillo’s unique in a competitive chain restaurant market.

Interestingly, a Portillo’s flyer lists “An iconic and beloved brand with obsessed, lifelong fans” as one of the company’s competitive strengths.

Would you consider the word “obsessed” to be a compliment? It’s an unusual choice of words, but the point is well taken: Portillo’s has loyal customers.

The prospectus also emphasizes the “values-driven and people-centered culture” of Portillo. The main idea here, I would say, is that the company wants to promote an image of a local, mom-and-pop type dining experience.

Plus, there’s a vibe that’s reminiscent of an older, simpler time in U.S. history:

“Our dining rooms evoke nostalgia and local influences. No two Portillos are alike. Each of our restaurants has their own themed decor ranging from a 1930s prohibition motif to a 1950s jukebox to a 1960s hippie bus.

It’s almost as if Portillo’s wants its customers to forget, just for a little while, that Covid-19 has already happened.

Back to reality

Perhaps the patrons of Portillo can temporarily escape the problems of the modern world.

The business, however, has yet to generate revenue and profit in the present moment.

With that in mind, let’s step out of our nostalgic journey and see how Portillo fared in the third quarter of 2021.

For the aperitif, we will observe that the company declared a diluted earnings per share of 1 cent.

Admittedly, this is a shortfall compared to the 8 cents per share that Wall Street was expecting, as well as the 5 cents per share recorded in the quarter of the previous year.

On the flip side, Portillo’s third-quarter revenue of $ 138 million was roughly in line with Wall Street’s estimate of $ 138.05 million.

Better yet, the company’s total revenue grew 15.3% year-over-year to $ 138 million, and sales for the same restaurant in Portillo were up 6.8%.

The bottom line

What’s great about Portillo is its traditional charm. It is very attractive in these difficult times.

Still, some traders might be put off by the company’s disappointing third quarter EPS result.

Nonetheless, there were some bright spots in the recent budget report.

Overall, Portillo’s is an old-fashioned restaurant that successfully fills a specific niche and offers a growth story that some investors might find compelling.

At the date of publication, David Moadel did not hold (directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, submitted to Publication guidelines.


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