Arcos Dorados (NYSE:ARCO) Posts Quarterly Earnings Results, Beats Expectations By $0.07 EPS

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

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 ARCO traded up $0.28 during trading hours on Thursday, hitting $8.18. The company’s stock had a trading volume of 1,458,356 shares, compared to its average volume of 1,314,916. The company has a market cap of $1.72 billion, a price-to-earnings ratio of 7.36 and a beta of 0.48. The company has a debt-to-equity ratio of 1.25, a current ratio of 0.80 and a quick ratio of 0.73. The business has a 50 day simple moving average of $8.29 and a two-hundred day simple moving average of $8.42. Arcos Dorados has a 52-week low of $6.54 and a 52-week high of $9.75.

Institutional Inflows and Outflows

Several institutional investors and hedge funds have recently bought and sold shares of ARCO. XTX Topco Ltd bought a new stake in Arcos Dorados during the 4th quarter valued at $1,302,000. Engineers Gate Manager LP boosted its holdings in shares of Arcos Dorados by 481.7% in the fourth quarter. Engineers Gate Manager LP now owns 116,214 shares of the restaurant operator’s stock worth $853,000 after acquiring an additional 96,237 shares during the period. Balyasny Asset Management L.P. purchased a new position in shares of Arcos Dorados in the fourth quarter valued at $1,065,000. Boothbay Fund Management LLC lifted its holdings in Arcos Dorados by 11.8% during the 4th quarter. Boothbay Fund Management LLC now owns 27,408 shares of the restaurant operator’s stock worth $201,000 after purchasing an additional 2,891 shares in the last quarter. Finally, Lazard Asset Management LLC lifted its holdings in Arcos Dorados by 6.7% during the 4th quarter. Lazard Asset Management LLC now owns 21,471,672 shares of the restaurant operator’s stock worth $157,602,000 after purchasing an additional 1,343,195 shares in the last quarter. 55.91% of the stock is owned by institutional investors.

Wall Street Analyst Weigh In

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

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.