Arcos Dorados (NYSE:ARCO) Issues Earnings Results, Beats Expectations By $0.01 EPS

Key Points

• Arcos Dorados reported quarterly EPS of $0.15, beating the $0.14 consensus, while revenue of $1.33 billion also exceeded expectations of $1.32 billion.
• Third-quarter revenue rose more than 11% in U.S. dollars, comparable sales climbed 15.5%, and digital sales grew about 22% to roughly two-thirds of system-wide sales. Adjusted EBITDA increased 9% year over year, excluding a prior-year Brazilian tax credit.
• The company approved up to $25 million in share repurchases and outlined plans for 550–600 restaurant openings during 2027–2030, with $1.3–$1.5 billion in capital spending; management also noted consumer caution, labor-cost pressure, and uncertainty around Brazil’s reforms.

Arcos Dorados (NYSE:ARCO - Get Free Report) posted its quarterly earnings data on Thursday. The restaurant operator reported $0.15 earnings per share (EPS) for the quarter, topping analysts' consensus estimates of $0.14 by $0.01, FiscalAI reports. The business had revenue of $1.33 billion during the quarter, compared to the consensus estimate 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 Stock Performance

ARCO traded up $0.06 on Thursday, hitting $7.00. The company's stock had a trading volume of 3,229,990 shares, compared to its average volume of 1,777,778. The firm has a market cap of $1.47 billion, a P/E ratio of 5.73 and a beta of 0.54. The company's 50 day simple moving average is $7.54 and its 200-day simple moving average is $8.17. Arcos Dorados has a 12 month low of $6.67 and a 12 month high of $9.75. The company has a quick ratio of 0.81, a current ratio of 0.88 and a debt-to-equity ratio of 1.14.

Key Stories Impacting Arcos Dorados

Investors following ARCO have been watching these stories:

• 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: Despite beating consensus, a separate report characterized third-quarter income as having retreated, suggesting the headline EPS beat may not reflect stronger underlying earnings. Arcos Dorados Q3 Income Retreats

Wall Street Analysts Forecast Growth

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

About Arcos Dorados

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.

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