Arcos Dorados (NYSE:ARCO) Announces Earnings Results

Arcos Dorados (NYSE:ARCO) issued its quarterly earnings results on Thursday. The restaurant operator reported $0.15 EPS for the quarter, topping analysts’ consensus estimates of $0.14 by $0.01, FiscalAI reports. The firm had revenue of $1.33 billion for the quarter, compared to analyst estimates of $1.32 billion. Arcos Dorados had a net margin of 5.15% and a return on equity of 12.50%.

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

• Third-quarter revenue rose more than 11% in U.S. dollars, while system-wide comparable sales increased 15.5%, supported by higher average checks and positive guest traffic. Digital sales grew about 22% and accounted for roughly two-thirds of system-wide sales.
• Underlying adjusted EBITDA increased 9% year over year, excluding an $85.6 million Brazilian federal tax credit recorded in the prior-year quarter, and the consolidated margin was 9.5%. Food and paper costs improved for a third consecutive quarter, though higher labor and other operating costs offset some of the benefit.
• Arcos Dorados reported last-12-month adjusted free cash flow of $156 million, about three times the year-ago level, and net leverage of 1.3x. The board approved a program to repurchase and cancel up to $25 million of Class A shares over six months.
• Management outlined long-term ambitions of mid- to high-single-digit annual revenue growth, 550–600 restaurant openings, and $1.3–$1.5 billion in CapEx from 2027 to 2030. The company said these are long-term objectives, not guidance for any single year.
• Management said consumers remain cautious and cited wage and labor-cost pressure across divisions; the potential operational and financial effects of Brazil’s labor and tax reforms are not yet clear. It described fourth-quarter sales trends as solid so far, but said comparable-sales momentum in Brazil had normalized.

Arcos Dorados Trading Up 0.8%

Shares of NYSE ARCO traded up $0.06 during mid-day trading on Thursday, hitting $7.00. The stock had a trading volume of 3,229,990 shares, compared to its average volume of 1,777,778. The company has a debt-to-equity ratio of 1.14, a quick ratio of 0.81 and a current ratio of 0.88. Arcos Dorados has a 1 year low of $6.67 and a 1 year high of $9.75. The business has a 50 day moving average price of $7.54 and a two-hundred day moving average price of $8.17. The firm has a market cap of $1.47 billion, a P/E ratio of 5.73 and a beta of 0.54.

Wall Street Analyst Weigh In

Several analysts have recently weighed in on the stock. JPMorgan Chase & Co. lowered their price objective on shares of Arcos Dorados from $10.50 to $10.00 and set an “overweight” rating on the stock in a research report on Tuesday. Wall Street Zen upgraded shares of Arcos Dorados from a “hold” rating to a “buy” rating in a research report on Saturday, November 7th. Weiss Ratings upgraded Arcos Dorados from a “hold (c-)” rating to a “hold (c)” rating in a research report on Thursday, October 8th. Bank of America lowered Arcos Dorados from a “buy” rating to a “neutral” rating and set a $9.00 target price for the company. in a research note on Monday, October 26th. Finally, Zacks Research upgraded shares of Arcos Dorados from a “hold” rating to a “strong-buy” rating in a research report on Tuesday, October 20th. One analyst has rated the stock with a Strong Buy rating, three have given a Buy rating and two have assigned a Hold rating to the company. According to MarketBeat.com, the company currently has a consensus rating of “Moderate Buy” and an average price target of $9.50.

Arcos Dorados News Summary

These are some of the ARCO news items that stood out recently:

• Positive Sentiment: Arcos Dorados reported third-quarter earnings of $0.15 per share, above analyst estimates of $0.13–$0.14 and up from $0.12 a year earlier. Revenue of $1.33 billion also topped the $1.32 billion estimate. Arcos Dorados Surpasses Q3 Earnings and Revenue Estimates
• Positive Sentiment: The company outlined plans for 550–600 restaurant openings from 2027 to 2030, backed by $1.3 billion–$1.5 billion in capital spending, and launched a $25 million share buyback. Expansion could support longer-term growth, although the spending plan is sizable. Arcos Dorados Outlines Expansion, Capital Spending and Buyback Plans
• Negative Sentiment: JPMorgan cut its price target on ARCO, a potentially negative signal for the stock; the supplied report does not specify the revised target or rationale. JPMorgan Cuts Arcos Dorados Stock Price Target

Arcos Dorados Company Profile

Arcos Dorados Holdings operates McDonald’s restaurants in Latin America and the Caribbean under a master franchise agreement. It is the largest independent McDonald’s franchisee in the world by restaurant count, with operations across 20 countries and territories in the region. The company’s restaurants serve McDonald’s menu items, including burgers, fries, chicken, breakfast foods, desserts and beverages. Its services also include McCafé offerings, delivery and digital ordering through channels such as mobile apps and kiosks.