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

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In the latest trading session, Arcos Dorados (ARCO - Free Report) closed at $7.83, marking a -1.51% move from the previous day. This change lagged the S&P 500's 0.09% gain on the day. Elsewhere, the Dow gained 0.07%, while the tech-heavy Nasdaq added 0.98%.

Heading into today, shares of the restaurant owner had gained 6% over the past month, outpacing the Retail-Wholesale sector's gain of 4.96% and the S&P 500's gain of 4.59% in that time.

Wall Street will be looking for positivity from Arcos Dorados as it approaches its next earnings report date. This is expected to be May 17, 2023. On that day, Arcos Dorados is projected to report earnings of $0.13 per share, which would represent year-over-year growth of 8.33%. Meanwhile, our latest consensus estimate is calling for revenue of $932.58 million, up 18.45% from the prior-year quarter.

ARCO's full-year Zacks Consensus Estimates are calling for earnings of $0.68 per share and revenue of $4.01 billion. These results would represent year-over-year changes of -1.45% and +11.28%, respectively.

It is also important to note the recent changes to analyst estimates for Arcos Dorados. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. Within the past 30 days, our consensus EPS projection has moved 3.31% higher. Arcos Dorados currently has a Zacks Rank of #1 (Strong Buy).

Investors should also note Arcos Dorados's current valuation metrics, including its Forward P/E ratio of 11.75. This valuation marks a discount compared to its industry's average Forward P/E of 24.04.

Investors should also note that ARCO has a PEG ratio of 1.51 right now. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. ARCO's industry had an average PEG ratio of 1.97 as of yesterday's close.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 62, putting it in the top 25% 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.

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