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Arcos Dorados (ARCO) Gains But Lags Market: What You Should Know

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Arcos Dorados (ARCO - Free Report) closed at $7.91 in the latest trading session, marking a +1.02% move from the prior day. This move lagged the S&P 500's daily gain of 1.96%. At the same time, the Dow added 1.57%, and the tech-heavy Nasdaq lost 3.03%.

Prior to today's trading, shares of the restaurant owner had gained 2.76% over the past month. This has lagged the Retail-Wholesale sector's gain of 3.58% and outpaced the S&P 500's gain of 2.19% in that time.

Arcos Dorados will be looking to display strength as it nears its next earnings release, which is expected to be May 17, 2023. The company is expected to report EPS of $0.13, up 8.33% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $932.58 million, up 18.45% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.68 per share and revenue of $4.01 billion, which would represent changes of -1.45% and +11.28%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for Arcos Dorados. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

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 ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 3.31% higher. Arcos Dorados is currently sporting a Zacks Rank of #1 (Strong Buy).

In terms of valuation, Arcos Dorados is currently trading at a Forward P/E ratio of 11.57. This represents a discount compared to its industry's average Forward P/E of 24.21.

We can also see that ARCO currently has a PEG ratio of 1.49. 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. The Retail - Restaurants was holding an average PEG ratio of 1.96 at yesterday's closing price.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 54, which puts it in the top 22% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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