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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 at $8.36 in the latest trading session, marking a +0.12% move from the prior day. This change outpaced the S&P 500's 0.46% loss on the day. At the same time, the Dow lost 0.17%, and the tech-heavy Nasdaq gained 6.06%.

Prior to today's trading, shares of the restaurant owner had gained 15.81% over the past month. This has outpaced the Retail-Wholesale sector's gain of 0.44% and the S&P 500's gain of 0.85% 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. 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 $959.61 million, up 21.89% from the year-ago period.

ARCO's full-year Zacks Consensus Estimates are calling for earnings of $0.69 per share and revenue of $4.08 billion. These results would represent year-over-year changes of 0% and +13.36%, respectively.

Any recent changes to analyst estimates for Arcos Dorados should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for 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, 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 has moved 5.34% higher. Arcos Dorados is currently a Zacks Rank #1 (Strong Buy).

Investors should also note Arcos Dorados's current valuation metrics, including its Forward P/E ratio of 12.1. This represents a discount compared to its industry's average Forward P/E of 23.65.

We can also see that ARCO currently has a PEG ratio of 1.56. 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. ARCO's industry had an average PEG ratio of 1.93 as of yesterday's close.

The Retail - Restaurants industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 38, putting it in the top 16% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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