What Happened:

Shares of fast food chain El Pollo Loco (NASDAQ:LOCO) jumped 35.3% in the pre-market session after the company reported first quarter results that beat analysts' same store sales, revenue, gross margin, and EPS expectations. Same store sales benefited from increase in average check size due to increases in menu prices and an approximately 1.2% increase in transactions. The company plans to open two new company-owned restaurants and five to seven new franchised restaurants, likely pointing to healthy demand for its offerings. Zooming out, we think this was a fantastic quarter that should have shareholders cheering.

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What is the market telling us:

El Pollo Loco's shares are not very volatile than the market average and over the last year have had only 4 moves greater than 5%. Moves this big are very rare for El Pollo Loco and that is indicating to us that this news had a significant impact on the market's perception of the business.

El Pollo Loco is up 12.6% since the beginning of the year, and at $9.90 per share it is trading close to its 52-week high of $10.75 from August 2023. Investors who bought $1,000 worth of El Pollo Loco's shares 5 years ago would now be looking at an investment worth $840.54.

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