Back to top

Image: Bigstock

Arcos Dorados (ARCO) Gains As Market Dips: What You Should Know

Read MoreHide Full Article

Arcos Dorados (ARCO - Free Report) closed the most recent trading day at $7.26, moving +0.55% from the previous trading session. The stock outpaced the S&P 500's daily loss of 0.84%. Elsewhere, the Dow lost 0.36%, while the tech-heavy Nasdaq lost 0.15%.

Prior to today's trading, shares of the restaurant owner had lost 7.32% over the past month. This has was narrower than the Retail-Wholesale sector's loss of 9.36% and the S&P 500's loss of 10.24% in that time.

Wall Street will be looking for positivity from Arcos Dorados as it approaches its next earnings report date. In that report, analysts expect Arcos Dorados to post earnings of $0.12 per share. This would mark no growth from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $823.46 million, up 13.84% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.49 per share and revenue of $3.37 billion, which would represent changes of +104.17% and +27.08%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for Arcos Dorados. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Arcos Dorados is currently sporting a Zacks Rank of #2 (Buy).

Valuation is also important, so investors should note that Arcos Dorados has a Forward P/E ratio of 14.73 right now. This represents a discount compared to its industry's average Forward P/E of 19.54.

Meanwhile, ARCO's PEG ratio is currently 0.43. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Retail - Restaurants industry currently had an average PEG ratio of 2.08 as of yesterday's close.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 194, which puts it in the bottom 24% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow ARCO in the coming trading sessions, be sure to utilize Zacks.com.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Arcos Dorados Holdings Inc. (ARCO) - free report >>

Published in