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Arcos Dorados (ARCO) Unveils Strong Q4 Comps and '24 View
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Arcos Dorados Holdings, Inc. (ARCO - Free Report) released updates on its performance ahead of the scheduled quarterly earnings announcement in March 2024.
The company reported robust systemwide comparable sales growth in the fourth quarter of 2023 and for the full year ending Dec 31, 2023. ARCO also provided guidance for restaurant openings and total capital expenditures for 2024.
ARCO had a robust year-end, driven by its Three D’s Strategy of Digital, Delivery and Drive-thru. Digital channels contributed 53% to ARCO's systemwide sales in the fourth quarter. The company's mobile app transformed into an e-commerce platform, enhancing engagement with customers. This resulted in increased visit frequency and market share gains. The Loyalty Program also experienced growth, surpassing three million members by the end of 2023.
Systemwide Comparable Sales
During the fourth quarter of 2023, systemwide comparable sales increased 32.4% compared with 35.7% in the year-ago period. Total revenue also saw a substantial increase of 15.4% compared with the prior-year quarter.
Brazil’s systemwide comparable sales rose 6.2% year-over-year compared with a rise of 21.9% a year ago. Despite facing a challenging comparison in October, Brazil's sales rebounded strongly in November and December, achieving double-digit comparable sales growth.
North Latin American Division or NOLAD's systemwide comparable sales grew 5.4% year-over-year compared with a rise of 19.6% reported in the prior-year quarter. Mexico and the French West Indies contributed strongly to the quarter’s sales growth. This was partially offset by the impact of social unrest in Panama during the quarter.
Systemwide comparable sales at the South Latin American Division (SLAD) saw a significant 94.7% year-over-year increase compared with a surge of 75.3% a year ago. Digital sales, in constant currency, rose by almost 65%, including a notable 50% increase in Delivery sales for the quarter. Identifiable sales contributed 21% to total sales during the quarter.
Restaurants Opening
In 2023, the company opened 81 Experience of the Future (EOTF) restaurants, including 72 free-standing units. Notably, 50 of these openings were in Brazil and an even number of openings between NOLAD and SLAD.
For 2024, the company anticipates opening 80 to 90 EOTF restaurants, with about 90% being free-standing units.
Capital Expenditures
In 2023, the company's total capital expenditures aligned with the guidance of $350 million. This figure includes all openings, modernizations, optimizations, and maintenance in the restaurant portfolio, along with investments in the Digital platform and back-office systems.
The company expects total capital expenditures in the range of $300-$350 million for 2024. It plans to fund these expenditures with available cash and cash generated from operations.
Price Performance
Image Source: Zacks Investment Research
Arcos Dorados’ shares have surged 49.9% in the past year compared with the Zacks Retail - Restaurants industry’s growth of 1.6%. The company has been benefiting from strong comparable sales growth across its systems, robust digital sales and new restaurant openings.
Zacks Rank & Key Picks
Arcos Dorados currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Zacks Retail-Wholesale sector are:
Abercrombie & Fitch Co. (ANF - Free Report) currently flaunts a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 713%, on average. Shares of ANF have surged 262.8% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ANF’s 2024 sales and earnings per share (EPS) suggests increases of 15.1% and 2,320%, respectively, from the year-ago period’s levels.
Fastenal Company (FAST - Free Report) sports a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 2.6%, on average. Shares of FAST have surged 35.7% in the past year.
The Zacks Consensus Estimate for FAST’s 2024 sales and EPS indicates 10.6% and 15.5% growth, respectively, from the year-ago period’s levels.
Chipotle Mexican Grill, Inc. (CMG - Free Report) currently carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 5.8%, on average. The stock has rallied 46% in the past year.
The Zacks Consensus Estimate for CMG’s 2024 sales and EPS suggests a rise of 13.2% and 19.6%, respectively, from the year-ago period’s levels.
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Arcos Dorados (ARCO) Unveils Strong Q4 Comps and '24 View
Arcos Dorados Holdings, Inc. (ARCO - Free Report) released updates on its performance ahead of the scheduled quarterly earnings announcement in March 2024.
The company reported robust systemwide comparable sales growth in the fourth quarter of 2023 and for the full year ending Dec 31, 2023. ARCO also provided guidance for restaurant openings and total capital expenditures for 2024.
ARCO had a robust year-end, driven by its Three D’s Strategy of Digital, Delivery and Drive-thru. Digital channels contributed 53% to ARCO's systemwide sales in the fourth quarter. The company's mobile app transformed into an e-commerce platform, enhancing engagement with customers. This resulted in increased visit frequency and market share gains. The Loyalty Program also experienced growth, surpassing three million members by the end of 2023.
Systemwide Comparable Sales
During the fourth quarter of 2023, systemwide comparable sales increased 32.4% compared with 35.7% in the year-ago period. Total revenue also saw a substantial increase of 15.4% compared with the prior-year quarter.
Brazil’s systemwide comparable sales rose 6.2% year-over-year compared with a rise of 21.9% a year ago. Despite facing a challenging comparison in October, Brazil's sales rebounded strongly in November and December, achieving double-digit comparable sales growth.
North Latin American Division or NOLAD's systemwide comparable sales grew 5.4% year-over-year compared with a rise of 19.6% reported in the prior-year quarter. Mexico and the French West Indies contributed strongly to the quarter’s sales growth. This was partially offset by the impact of social unrest in Panama during the quarter.
Systemwide comparable sales at the South Latin American Division (SLAD) saw a significant 94.7% year-over-year increase compared with a surge of 75.3% a year ago. Digital sales, in constant currency, rose by almost 65%, including a notable 50% increase in Delivery sales for the quarter. Identifiable sales contributed 21% to total sales during the quarter.
Restaurants Opening
In 2023, the company opened 81 Experience of the Future (EOTF) restaurants, including 72 free-standing units. Notably, 50 of these openings were in Brazil and an even number of openings between NOLAD and SLAD.
For 2024, the company anticipates opening 80 to 90 EOTF restaurants, with about 90% being free-standing units.
Capital Expenditures
In 2023, the company's total capital expenditures aligned with the guidance of $350 million. This figure includes all openings, modernizations, optimizations, and maintenance in the restaurant portfolio, along with investments in the Digital platform and back-office systems.
The company expects total capital expenditures in the range of $300-$350 million for 2024. It plans to fund these expenditures with available cash and cash generated from operations.
Price Performance
Image Source: Zacks Investment Research
Arcos Dorados’ shares have surged 49.9% in the past year compared with the
Zacks Retail - Restaurants industry’s growth of 1.6%. The company has been benefiting from strong comparable sales growth across its systems, robust digital sales and new restaurant openings.
Zacks Rank & Key Picks
Arcos Dorados currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Zacks Retail-Wholesale sector are:
Abercrombie & Fitch Co. (ANF - Free Report) currently flaunts a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of 713%, on average. Shares of ANF have surged 262.8% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ANF’s 2024 sales and earnings per share (EPS) suggests increases of 15.1% and 2,320%, respectively, from the year-ago period’s levels.
Fastenal Company (FAST - Free Report) sports a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 2.6%, on average. Shares of FAST have surged 35.7% in the past year.
The Zacks Consensus Estimate for FAST’s 2024 sales and EPS indicates 10.6% and 15.5% growth, respectively, from the year-ago period’s levels.
Chipotle Mexican Grill, Inc. (CMG - Free Report) currently carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 5.8%, on average. The stock has rallied 46% in the past year.
The Zacks Consensus Estimate for CMG’s 2024 sales and EPS suggests a rise of 13.2% and 19.6%, respectively, from the year-ago period’s levels.