What Happened?

Shares of casual restaurant chain Portillo’s (NASDAQ: PTLO) fell 4.4% in the morning session after the company reported weak third-quarter 2025 financial results that missed analyst expectations. Total revenue grew just 1.8% year-over-year to $181.4 million, falling short of Wall Street's estimates. Earnings per share of $0.02 also missed projections and represented a sharp decline from the $0.11 reported in the same quarter last year. While same-store sales were flat, profitability took a significant hit. The company's operating margin fell to 3% from 9% a year ago, as rising costs outpaced sales growth. Gross margin also compressed, declining 3.3 percentage points year-over-year, suggesting pressure from input costs. Overall, the results pointed to clear challenges for the company's profitability and operational performance.

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What Is The Market Telling Us

Portillo’s shares are very volatile and have had 28 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 29 days ago when the stock dropped 3.7% on the news that B of A Securities downgraded the stock from a "Buy" to a "Neutral" rating and slashed its price target. The investment firm cut its price projection for the stock by 50%, lowering it from $14.00 to $7.00. This followed a recent quarter where the company's revenue, while up 3.6% from the previous year to $188.5 million, missed analysts' expectations. Portillo's also logged a slight miss on its same-store sales estimates, contributing to a re-evaluation of the stock's outlook.

Portillo's is down 45.9% since the beginning of the year, and at $5.02 per share, it is trading 67.4% below its 52-week high of $15.39 from February 2025. Investors who bought $1,000 worth of Portillo’s shares at the IPO in October 2021 would now be looking at an investment worth $172.34.

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