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Is Arcos Dorados (ARCO) a Great Value Stock Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is Arcos Dorados (ARCO - Free Report) . ARCO is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 17.37. This compares to its industry's average Forward P/E of 22.87. ARCO's Forward P/E has been as high as 276.72 and as low as 16.82, with a median of 20.58, all within the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. ARCO has a P/S ratio of 0.57. This compares to its industry's average P/S of 1.3.

Finally, we should also recognize that ARCO has a P/CF ratio of 10.98. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 14.48. Within the past 12 months, ARCO's P/CF has been as high as 14.72 and as low as -283.26, with a median of 9.11.

Another great Retail - Restaurants stock you could consider is Jack In The Box (JACK - Free Report) , which is a # 2 (Buy) stock with a Value Score of A.

Jack In The Box is trading at a forward earnings multiple of 11.84 at the moment, with a PEG ratio of 0.70. This compares to its industry's average P/E of 22.87 and average PEG ratio of 1.85.

Over the past year, JACK's P/E has been as high as 18.86, as low as 11.33, with a median of 13.41; its PEG ratio has been as high as 1.11, as low as 0.67, with a median of 0.62 during the same time period.

Furthermore, Jack In The Box holds a P/B ratio of -2.27 and its industry's price-to-book ratio is -21.94. JACK's P/B has been as high as -2.09, as low as -3.59, with a median of -2.62 over the past 12 months.

Value investors will likely look at more than just these metrics, but the above data helps show that Arcos Dorados and Jack In The Box are likely undervalued currently. And when considering the strength of its earnings outlook, ARCO and JACK sticks out as one of the market's strongest value stocks.


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