Arcos Dorados (NYSE:ARCO) Issues Earnings Results, Beats Estimates By $0.07 EPS

Arcos Dorados (NYSE:ARCO) announced its quarterly earnings data on Thursday. The restaurant operator reported $0.22 earnings per share for the quarter, topping 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 company had revenue of $1.31 billion during the quarter, compared to analyst estimates 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 down $0.24 during midday trading on Friday, hitting $7.89. 647,685 shares of the company’s stock traded hands, compared to its average volume of 1,314,130. The firm has a fifty day moving average of $8.29 and a 200 day moving average of $8.42. Arcos Dorados has a 1 year low of $6.54 and a 1 year high of $9.75. The company has a debt-to-equity ratio of 1.25, a quick ratio of 0.73 and a current ratio of 0.80. The stock has a market capitalization of $1.66 billion, a price-to-earnings ratio of 7.10 and a beta of 0.48.

Institutional Trading of Arcos Dorados

Hedge funds and other institutional investors have recently added to or reduced their stakes in the business. Global Retirement Partners LLC boosted its stake in shares of Arcos Dorados by 9,074.6% during the 4th quarter. Global Retirement Partners LLC now owns 5,780 shares of the restaurant operator’s stock worth $42,000 after acquiring an additional 5,717 shares during the last quarter. Quarry LP bought a new position in Arcos Dorados in the 3rd quarter worth $45,000. Aquatic Capital Management LLC bought a new position in Arcos Dorados in the 3rd quarter worth $53,000. Virtu Financial LLC purchased a new position in Arcos Dorados during the third quarter valued at $87,000. Finally, Sei Investments Co. bought a new stake in Arcos Dorados during the third quarter valued at about $106,000. 55.91% of the stock is owned by hedge funds and other institutional investors.

Analyst Ratings Changes

Several equities research analysts recently commented on the company. Wall Street Zen raised Arcos Dorados from a “hold” rating to a “buy” rating in a research report on Saturday, May 23rd. Santander upgraded shares of Arcos Dorados to an “outperform” rating in a research note on Monday, April 20th. Zacks Research downgraded shares of Arcos Dorados from a “strong-buy” rating to a “hold” rating in a report on Monday. JPMorgan Chase & Co. raised shares of Arcos Dorados from a “neutral” rating to an “overweight” rating and raised their price target for the company from $9.00 to $10.50 in a report on Friday, July 17th. Finally, Weiss Ratings lowered shares of Arcos Dorados from a “hold (c+)” rating to a “hold (c)” rating in a research note on Monday, June 29th. Three investment analysts have rated the stock with a Buy rating and two have issued a Hold rating to the company. According to MarketBeat.com, the company has a consensus rating of “Moderate Buy” and a consensus target price of $10.50.

Arcos Dorados Company Profile

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.