Arcos Dorados (NYSE:ARCO) Shares Gap Up After Earnings Beat

Key Points

• Arcos Dorados reported better-than-expected quarterly results, with earnings per share of $0.22 versus the $0.15 consensus estimate and revenue of $1.31 billion compared with expectations of $1.28 billion.
• Shares jumped 5.2%, opening at $8.45 after previously closing at $7.90. The stock was last trading near $8.33.
• Analyst sentiment is generally positive: JPMorgan upgraded the shares to “overweight” and raised its target to $10.50, while MarketBeat lists a “Moderate Buy” consensus rating and a $10.50 average price target.

Arcos Dorados Holdings Inc. (NYSE:ARCO - Get Free Report) gapped up before the market opened on Thursday after the company announced better than expected quarterly earnings. The stock had previously closed at $7.90, but opened at $8.45. Arcos Dorados shares last traded at $8.3330, with a volume of 381,885 shares trading hands.

The restaurant operator reported $0.22 earnings per share for the quarter, beating analysts' consensus estimates of $0.15 by $0.07. 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 the consensus estimate of $1.28 billion.

Wall Street Analyst Weigh In

A number of brokerages recently weighed in on ARCO. JPMorgan Chase & Co. upgraded shares of Arcos Dorados from a "neutral" rating to an "overweight" rating and raised their target price for the stock from $9.00 to $10.50 in a report on Friday, July 17th. Weiss Ratings downgraded Arcos Dorados from a "hold (c+)" rating to a "hold (c)" rating in a research report on Monday, June 29th. Wall Street Zen raised Arcos Dorados from a "hold" rating to a "buy" rating in a research note on Saturday, May 23rd. Zacks Research cut Arcos Dorados from a "strong-buy" rating to a "hold" rating in a report on Monday. Finally, Santander raised Arcos Dorados to an "outperform" rating in a research report on Monday, April 20th. Three equities research analysts have rated the stock with a Buy rating and two have assigned a Hold rating to the company's stock. According to MarketBeat, the stock has a consensus rating of "Moderate Buy" and an average 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. Lazard Asset Management LLC boosted its position in Arcos Dorados by 35.3% during the 3rd quarter. Lazard Asset Management LLC now owns 20,128,477 shares of the restaurant operator's stock worth $135,867,000 after acquiring an additional 5,255,199 shares during the period. Sei Investments Co. increased its holdings in shares of Arcos Dorados by 132.8% in the 1st quarter. Sei Investments Co. now owns 3,483,732 shares of the restaurant operator's stock valued at $28,741,000 after purchasing an additional 1,987,271 shares during the period. Brightlight Capital Management LP boosted its holdings in shares of Arcos Dorados by 55.2% during the fourth quarter. Brightlight Capital Management LP now owns 3,466,800 shares of the restaurant operator's stock worth $25,446,000 after purchasing an additional 1,232,800 shares during the period. SPX Gestao de Recursos Ltda boosted its holdings in shares of Arcos Dorados by 19.1% during the fourth quarter. SPX Gestao de Recursos Ltda now owns 7,551,676 shares of the restaurant operator's stock worth $55,429,000 after purchasing an additional 1,209,055 shares during the period. Finally, Globeflex Capital L P purchased a new position in Arcos Dorados during the second quarter valued at approximately $6,574,000. Institutional investors and hedge funds own 55.91% of the company's stock.

Arcos Dorados Trading Up 5.2%

The stock has a market cap of $1.75 billion, a price-to-earnings ratio of 7.48 and a beta of 0.48. 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 company's 50 day simple moving average is $8.29 and its two-hundred day simple moving average is $8.42.

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.

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