El Pollo Loco Holdings Inc. (NASDAQ: LOCO) is set to report its first formal earnings report since coming public on Thursday after the market closes. Investors are eager to see what this company can show with earnings. Because this is the first real earnings report since its initial public offering (IPO), a caveat may be worth issuing that analysts likely had to rely heavily on IPO roadshow commentary from the company in making their estimates.

Thomson Reuters has consensus estimates of $0.16 in earnings per share (EPS) and $86.44 million in revenue. Estimates for the coming quarter are $0.12 in EPS and $84.18 million in revenue. The main issue here (that is, yet another caveat) is that there are so few analysts making estimates that it is hard to have a strong conviction on how solid these consensus numbers really are.

Analysts only recently were able to issue formal ratings on El Pollo Loco. They issued the following cautious ratings after the quiet period expiration:

• Baird started as Neutral with a $32 price target
• Jeffries started as Hold with a $30 price target
• Morgan Stanley started as Underweight with a $22 price target
• Stifel started as Hold with a $30 price target

One positive analyst call was seen from William Blair. That firm issued an Outperform rating for El Pollo Loco.

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We have seen the share price pass through these various price target levels, but the stock still feels too new to have established a real pricing trend yet. The initial parabolic behavior might be misleading to investors in terms of the volatility, but the coming earnings could play a role in influencing the price level ahead.

Following the IPO at $15.00, the share price soared to a high of $41.70 just days afterward. Since then, the stock has generally stayed within a $30 to $36 range.

One issue that likely will be the first of several new announcements in the El Pollo Loco growth strategy is franchise launches around the country. The company recently signed for 20 franchise locations in Texas. That was to a restaurant franchise owner who was shown to own and operate more than 260 restaurant locations under three brands in multiple states.

El Pollo Loco represents that it has more than 400 company-owned and franchised restaurants throughout Arizona, California, Nevada, Texas and Utah. The company’s most recent press release signaled that it plans to expand its presence in key markets, targeting growth of 8% to 10% per year, via a combination of company and existing and new franchisee development.

Trading volume in El Pollo Loco shares has remained active, so it should not be too shocking if this earnings report generates a big move up or down, depending on the direction of the news. Options trading has been very mixed, and the September options contracts do not have any serious bias between calls and puts (bulls and bears). That being said, options traders are braced for up to a minimum of a $2.50 move.

El Pollo Loco has a consensus analyst price target of $28.00. Shares traded at $34.00 in late morning trading ahead of earnings, and the stock has a post-IPO trading range of $18.48 to $41.70.

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