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

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Arcos Dorados (ARCO - Free Report) closed the most recent trading day at $7.92, moving +0.13% from the previous trading session. This change outpaced the S&P 500's 0.7% loss on the day. Elsewhere, the Dow lost 0.8%, while the tech-heavy Nasdaq lost 1.82%.

Coming into today, shares of the restaurant owner had gained 9.1% in the past month. In that same time, the Retail-Wholesale sector lost 0.81%, while the S&P 500 gained 0.39%.

Investors will be hoping for strength from Arcos Dorados as it approaches its next earnings release, which is expected to be May 17, 2023. The company is expected to report EPS of $0.12, unchanged from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $959.61 million, up 21.89% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $0.69 per share and revenue of $4.08 billion. These totals would mark changes of 0% and +13.36%, respectively, from last 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. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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 5.34% higher. Arcos Dorados currently has a Zacks Rank of #1 (Strong Buy).

Digging into valuation, Arcos Dorados currently has a Forward P/E ratio of 11.46. Its industry sports an average Forward P/E of 24.01, so we one might conclude that Arcos Dorados is trading at a discount comparatively.

Also, we should mention that ARCO has a PEG ratio of 1.48. 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. Retail - Restaurants stocks are, on average, holding a PEG ratio of 1.99 based on yesterday's closing prices.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 46, putting it in the top 19% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

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