Why Portillo's Stock Skyrocketed Tuesday Morning

Financial Performance - Preliminary revenue of $184 6 million for the quarter slightly exceeded analysts' expectations of$184 4 million [1] - Full-year preliminary revenue of $710 6 million increased 4 5$710 9 million expected by analysts [1] - Same-store sales increased 0 3% year over year, significantly outperforming analysts' consensus estimates of a 1 1% drop and management's guidance of a 0 8% decline [5] Market Reaction - Shares of Portillo's surged as much as 18 9% on Tuesday morning and remained up 13 3% by early afternoon [3] - The stock's rise was driven by surprisingly robust preliminary financial results [3] Industry Context - The restaurant industry has faced significant challenges due to historically high inflation, which has increased food prices and labor costs [6] - Restaurant traffic in the third quarter was down 3% year over year and 17% below Q3 2019 levels, according to CREST Research [6] - Despite these challenges, Portillo's outperformed its peers with a slight increase in same-store sales, which was a rare positive in the industry [2] Future Outlook - Management forecasts same-store sales to increase roughly 1% year over year at the midpoint of its 2025 guidance [4] - Revenue growth is expected to be approximately 11%, with adjusted EBITDA increasing by about 7% in 2025 [4] Valuation - Portillo's is trading at 24 times earnings, which is considered an intriguing multiple given its outperformance relative to peers [2]