Moerus Capital Management LLC Raises Stake in Arcos Dorados Holdings Inc. $ARCO

Key Points

• Moerus Capital Management increased its stake in Arcos Dorados by 19.9% in the first quarter, adding 706,683 shares and bringing its total to 4.26 million shares. The holding now represents about 13% of the fund’s portfolio and 2.02% of Arcos Dorados.
• Arcos Dorados reported better-than-expected quarterly results, with EPS of $0.17 versus estimates of $0.11 and revenue of $1.22 billion, slightly above forecasts. Revenue rose 12.9% year over year, and the company posted a 4.86% net margin.
• Analyst sentiment is positive, with several firms upgrading the stock and JPMorgan lifting its price target to $10.50. The consensus rating is currently a Buy, with a consensus target price of $10.50.

Moerus Capital Management LLC raised its holdings in Arcos Dorados Holdings Inc. (NYSE:ARCO - Free Report) by 19.9% in the first quarter, according to its most recent 13F filing with the Securities and Exchange Commission. The fund owned 4,263,589 shares of the restaurant operator's stock after acquiring an additional 706,683 shares during the quarter. Arcos Dorados accounts for about 13.0% of Moerus Capital Management LLC's portfolio, making the stock its 3rd biggest holding. Moerus Capital Management LLC owned 2.02% of Arcos Dorados worth $35,175,000 as of its most recent SEC filing.

A number of other hedge funds and other institutional investors have also made changes to their positions in the business. Royal Bank of Canada boosted its stake in shares of Arcos Dorados by 23.1% during the 1st quarter. Royal Bank of Canada now owns 538,925 shares of the restaurant operator's stock worth $4,344,000 after acquiring an additional 101,301 shares in the last quarter. Jane Street Group LLC lifted its stake in Arcos Dorados by 58.3% during the first quarter. Jane Street Group LLC now owns 309,785 shares of the restaurant operator's stock valued at $2,497,000 after buying an additional 114,034 shares in the last quarter. Jump Financial LLC purchased a new stake in Arcos Dorados during the second quarter valued at about $1,315,000. WINTON GROUP Ltd lifted its position in shares of Arcos Dorados by 213.3% in the 2nd quarter. WINTON GROUP Ltd now owns 50,077 shares of the restaurant operator's stock valued at $395,000 after acquiring an additional 34,094 shares in the last quarter. Finally, Nebula Research & Development LLC lifted its position in shares of Arcos Dorados by 6.3% in the 2nd quarter. Nebula Research & Development LLC now owns 166,767 shares of the restaurant operator's stock valued at $1,316,000 after acquiring an additional 9,892 shares in the last quarter. 55.91% of the stock is currently owned by institutional investors.

Arcos Dorados Price Performance

NYSE ARCO opened at $8.28 on Friday. The company has a quick ratio of 0.73, a current ratio of 0.80 and a debt-to-equity ratio of 1.25. The stock has a market capitalization of $1.74 billion, a PE ratio of 7.46 and a beta of 0.48. Arcos Dorados Holdings Inc. has a 12-month low of $6.51 and a 12-month high of $9.75. The company has a 50 day moving average price of $8.42 and a two-hundred day moving average price of $8.37.

Arcos Dorados (NYSE:ARCO - Get Free Report) last announced its quarterly earnings results on Thursday, May 21st. The restaurant operator reported $0.17 earnings per share for the quarter, topping analysts' consensus estimates of $0.11 by $0.06. The company had revenue of $1.22 billion during the quarter, compared to analysts' expectations of $1.21 billion. Arcos Dorados had a return on equity of 10.47% and a net margin of 4.86%.The business's quarterly revenue was up 12.9% compared to the same quarter last year. During the same quarter in the previous year, the firm earned $0.07 earnings per share. As a group, equities analysts predict that Arcos Dorados Holdings Inc. will post 0.76 earnings per share for the current fiscal year.

Analysts Set New Price Targets

Several analysts have recently commented on ARCO shares. The Goldman Sachs Group reaffirmed a "buy" rating on shares of Arcos Dorados in a research report on Wednesday, April 8th. Santander raised Arcos Dorados to an "outperform" rating in a research note on Monday, April 20th. Zacks Research raised shares of Arcos Dorados from a "hold" rating to a "strong-buy" rating in a research report on Friday, July 10th. JPMorgan Chase & Co. upgraded shares of Arcos Dorados from a "neutral" rating to an "overweight" rating and raised their price target for the stock from $9.00 to $10.50 in a report on Friday, July 17th. Finally, Wall Street Zen upgraded shares of Arcos Dorados from a "hold" rating to a "buy" rating in a research note on Saturday, May 23rd. One equities research analyst has rated the stock with a Strong Buy rating, three have assigned a Buy rating and one has given a Hold rating to the company. According to MarketBeat.com, the company currently has an average rating of "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.

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