Arcos Dorados (NYSE:ARCO) Shares Gap Up - What's Next?

Key Points

• Arcos Dorados shares jumped 10.6%, opening at $7.77 versus a prior close of $7.11, before trading near $7.73.
• Analyst sentiment remains moderately bullish: three analysts rate the stock Buy and two rate it Hold, producing an average target price of $10.50.
• The company exceeded quarterly expectations, reporting $0.22 EPS versus $0.15 expected and $1.31 billion in revenue versus a $1.28 billion estimate; institutional investors own 55.91% of the stock.

Arcos Dorados Holdings Inc. (NYSE:ARCO - Get Free Report) gapped up before the market opened on Monday. The stock had previously closed at $7.11, but opened at $7.77. Arcos Dorados shares last traded at $7.7260, with a volume of 926,275 shares trading hands.

Analyst Ratings Changes

A number of brokerages have recently commented on ARCO. Zacks Research lowered Arcos Dorados from a "strong-buy" rating to a "hold" rating in a report on Monday, August 10th. JPMorgan Chase & Co. raised Arcos Dorados from a "neutral" rating to an "overweight" rating and upped their target price for the stock from $9.00 to $10.50 in a research report on Friday, July 17th. Finally, Weiss Ratings downgraded Arcos Dorados from a "hold (c)" rating to a "hold (c-)" rating in a report on Monday, September 14th. Three investment analysts have rated the stock with a Buy rating and two have given a Hold rating to the company's stock. According to data from MarketBeat.com, the stock has an average rating of "Moderate Buy" and an average target price of $10.50.

Arcos Dorados Trading Up 10.6%

The company has a debt-to-equity ratio of 1.14, a quick ratio of 0.81 and a current ratio of 0.88. The company's 50 day moving average is $7.89 and its 200 day moving average is $8.27. The stock has a market capitalization of $1.66 billion, a price-to-earnings ratio of 6.45 and a beta of 0.48.

Arcos Dorados (NYSE:ARCO - Get Free Report) last issued its quarterly earnings results on Friday, August 14th. The restaurant operator reported $0.22 earnings per share (EPS) for the quarter, beating the consensus estimate of $0.15 by $0.07. The firm had revenue of $1.31 billion for the quarter, compared to analyst estimates of $1.28 billion. Arcos Dorados had a return on equity of 12.50% and a net margin of 5.15%. On average, research analysts forecast that Arcos Dorados Holdings Inc. will post 0.79 EPS for the current fiscal year.

Institutional Investors Weigh In On Arcos Dorados

A number of hedge funds and other institutional investors have recently bought and sold shares of ARCO. Sei Investments Co. boosted its stake in Arcos Dorados by 132.8% in the first quarter. Sei Investments Co. now owns 3,483,732 shares of the restaurant operator's stock valued at $28,741,000 after acquiring an additional 1,987,271 shares during the last quarter. Lazard Asset Management LLC raised its position in shares of Arcos Dorados by 7.9% during the 1st quarter. Lazard Asset Management LLC now owns 23,174,841 shares of the restaurant operator's stock valued at $191,192,000 after acquiring an additional 1,703,169 shares during the last quarter. Brightlight Capital Management LP raised its position in shares of Arcos Dorados by 55.2% during the 4th quarter. Brightlight Capital Management LP now owns 3,466,800 shares of the restaurant operator's stock valued at $25,446,000 after acquiring an additional 1,232,800 shares during the last quarter. Globeflex Capital L P acquired a new position in shares of Arcos Dorados in the 2nd quarter valued at $6,574,000. Finally, Moerus Capital Management LLC lifted its stake in shares of Arcos Dorados by 19.9% in the 1st quarter. Moerus Capital Management LLC now owns 4,263,589 shares of the restaurant operator's stock valued at $35,175,000 after purchasing an additional 706,683 shares during the period. 55.91% of the stock is owned by institutional investors and hedge funds.

Arcos Dorados Company Profile

Arcos Dorados Holdings Inc is the largest independent McDonald's franchisee in the world and the exclusive master franchisee for McDonald's in Latin America and the Caribbean. The company operates and franchises McDonald's restaurants across 20 countries and territories, serving customers through company-operated and franchised locations.

Its restaurant business offers McDonald's products including hamburgers, chicken sandwiches, French fries, breakfast items, desserts, soft drinks and McCafé beverages.

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