Arcos Dorados (NYSE:ARCO) Releases Quarterly Earnings Results

Arcos Dorados (NYSE:ARCO) released its quarterly earnings results on Thursday. The restaurant operator reported $0.22 earnings per share for the quarter, beating analysts’ consensus estimates of $0.15 by $0.07, FiscalAI reports. Arcos Dorados had a net margin of 4.86% and a return on equity of 10.47%. The business had revenue of $1.31 billion for the quarter, compared to analysts’ expectations of $1.28 billion.

Here are the key takeaways from Arcos Dorados’ conference call:

• Record quarterly performance: Revenue reached $1.3 billion, up more than 14% year over year in constant currencies, while adjusted EBITDA rose over 20% to $126.8 million and net income and EPS reached record second-quarter levels.
• Digital and brand engagement strengthened: Digital sales increased more than 25% and represented approximately 66% of total sales, identified sales exceeded 28%, and guest-traffic market share gained roughly 0.5 percentage points across the region.
• Brazil rebounded materially: Value offerings, targeted digital promotions, and FIFA World Cup marketing drove positive traffic and comparable-sales momentum, while lower food and paper costs, operating leverage, and G&A savings expanded Brazil’s EBITDA margin by 180 basis points to 14.6%.
• Consumer conditions remain challenging in several markets: NOLAD faced a difficult comparison base and pressured spending, while SLAD margins were broadly flat and Argentina experienced continued consumer weakness and food-and-paper cost pressure.
• Financial flexibility and growth investment remain strong: Net leverage improved to 1.1 times, the company fully repaid its 2029 senior notes, opened 35 restaurants in the first half, and reduced average new-store capital costs by approximately 15%–20% while continuing portfolio modernization.

Arcos Dorados Stock Performance

Shares of NYSE:ARCO traded up $0.23 on Thursday, hitting $8.13. 1,486,965 shares of the company were exchanged, compared to its average volume of 1,315,228. The firm has a market capitalization of $1.71 billion, a P/E ratio of 7.34 and a beta of 0.48. The company has a current ratio of 0.80, a quick ratio of 0.73 and a debt-to-equity ratio of 1.25. Arcos Dorados has a 1-year low of $6.54 and a 1-year high of $9.75. The stock’s 50 day moving average price is $8.29 and its 200 day moving average price is $8.42.

Wall Street Analysts Forecast Growth

ARCO has been the topic of several analyst reports. Weiss Ratings lowered shares of Arcos Dorados from a “hold (c+)” rating to a “hold (c)” rating in a report on Monday, June 29th. Zacks Research lowered Arcos Dorados from a “strong-buy” rating to a “hold” rating in a report on Monday. Wall Street Zen upgraded Arcos Dorados from a “hold” rating to a “buy” rating in a research note on Saturday, May 23rd. JPMorgan Chase & Co. raised Arcos Dorados from a “neutral” rating to an “overweight” rating and upped their target price for the company from $9.00 to $10.50 in a research report on Friday, July 17th. Finally, Santander upgraded Arcos Dorados to an “outperform” rating in a research note on Monday, April 20th. Three analysts have rated the stock with a Buy rating and two have assigned a Hold rating to the company’s stock. According to data from MarketBeat, Arcos Dorados currently has an average rating of “Moderate Buy” and a consensus price target of $10.50.

Hedge Funds Weigh In On Arcos Dorados

A number of hedge funds and other institutional investors have recently added to or reduced their stakes in the company. Regal Investment Advisors LLC acquired a new stake in Arcos Dorados during the 4th quarter valued at approximately $147,000. &PARTNERS increased its stake in shares of Arcos Dorados by 25.3% in the fourth quarter. &PARTNERS now owns 22,070 shares of the restaurant operator’s stock worth $162,000 after acquiring an additional 4,458 shares during the period. Brooklyn Investment Group acquired a new stake in shares of Arcos Dorados in the fourth quarter worth $223,000. LPL Financial LLC raised its holdings in shares of Arcos Dorados by 17.9% during the fourth quarter. LPL Financial LLC now owns 33,295 shares of the restaurant operator’s stock worth $244,000 after purchasing an additional 5,055 shares during the last quarter. Finally, Cibc World Market Inc. raised its holdings in shares of Arcos Dorados by 20.5% during the fourth quarter. Cibc World Market Inc. now owns 32,350 shares of the restaurant operator’s stock worth $237,000 after purchasing an additional 5,500 shares during the last quarter. Hedge funds and other institutional investors own 55.91% of the company’s stock.

About Arcos Dorados

Arcos Dorados Holdings Inc is the largest independent McDonald’s franchisee in the world, operating under an exclusive license agreement with McDonald’s Corporation. The company develops, owns and operates quick-service restaurants, offering the full McDonald’s menu, including hamburgers, chicken sandwiches, salads, sides, desserts and McCafé beverages. In addition to restaurant operations, Arcos Dorados manages supply chain logistics, property development, training and support services for its franchise network.

Headquartered in Montevideo, Uruguay, Arcos Dorados serves 20 markets across Latin America and the Caribbean, including Argentina, Brazil, Chile, Colombia, Mexico, Puerto Rico and Uruguay.