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Bear of the Day: Arco Platform (ARCE)

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The pandemic made a lasting impact on several industries around the world. Further, it changed the way we travel, educate, work, and interact with the world around us. Basically, it was a total game-changer. Heading out of it, there were some stocks and industries which really shined and others that continued to struggle mightily. One way to avoid potential pitfalls in the investing world is to avoid stocks that have seen their earnings contract. Stocks which are not in the good graces of the Zacks Rank typically fall into this category.

One such stock is today’s Bear of the Day, Arco Platform (ARCE - Free Report) . Arco Platform Limited, a technology company in the education sector, provides a pedagogical system with technology-enabled features to deliver educational content to private schools in Brazil. The company's curriculum solutions provide educational content from basic to secondary education K-12 curriculum in printed and digital formats delivered through its platform. As of March 31, 2021, it had a network consisted of 6,119 partner schools and 1,785,576 enrolled students. 

The stock is currently a Zacks Rank #5 (Strong Sell) in the Internet – Software industry which ranks in the Bottom 19% of our Zacks Industry Rank. The reason for the unfavorable rank is negative revisions for the current year and next year coming from analysts. To be fair, the drop was not that dramatic. Our Zacks Consensus Estimate for the current year and next year have each dropped by a penny. The problem is, the most recent earnings estimate revisions have been the most dramatic. A 35-cent estimate for this year is the latest revision.

The story is not all gloom and doom here. The company still enjoys solid sales growth for this year and next year. Current year sales growth is 25.7% while next year is 20.98%. Unfortunately, that number did not coincide with growth on the EPS side. Earnings are expected to contract 45.45% this year. The good news for investors is that next year’s earnings growth is estimated to come back at 30.95%, helping to claw back a good chunk of that contraction.

Other stocks within the same industry include Zacks Rank #1 (Strong Buy) Jiayin Group (JFIN - Free Report) and Paycom Software (PAYC - Free Report) .


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Paycom Software, Inc. (PAYC) - free report >>

Arco Platform Limited (ARCE) - free report >>

Jiayin Group Inc. Sponsored ADR (JFIN) - free report >>