Arcos Dorados (NYSE:ARCO) Stock Falls 5.7% - Should You Sell?

Key Points

• Arcos Dorados shares fell 5.7% to $7.6550 in Friday trading, below both its 50-day moving average of $7.87 and 200-day moving average of $8.28.
• Analyst sentiment remains generally positive, with three Buy ratings and two Holds producing a “Moderate Buy” consensus and an average price target of $10.50.
• The company recently exceeded quarterly expectations, reporting $0.22 in EPS versus the $0.15 consensus and $1.31 billion in revenue versus the $1.28 billion estimate; institutional investors own 55.91% of its shares.

Arcos Dorados Holdings Inc. (NYSE:ARCO - Get Free Report) shares fell 5.7% on Friday. The company traded as low as $7.64 and last traded at $7.6550. 204,606 shares changed hands during mid-day trading, a decline of 85% from the average daily volume of 1,371,644 shares. The stock had previously closed at $8.12.

Analyst Ratings Changes

ARCO has been the topic of several research reports. JPMorgan Chase & Co. raised Arcos Dorados from a "neutral" rating to an "overweight" rating and raised their price objective 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 report on Monday, September 14th. Finally, Zacks Research cut Arcos Dorados from a "strong-buy" rating to a "hold" rating in a research report on Monday, August 10th. Three research analysts have rated the stock with a Buy rating and two have issued a Hold rating to the stock. According to MarketBeat, the company has an average rating of "Moderate Buy" and an average target price of $10.50.

Arcos Dorados Stock Performance

The company has a current ratio of 0.88, a quick ratio of 0.81 and a debt-to-equity ratio of 1.14. The stock has a market cap of $1.64 billion, a price-to-earnings ratio of 6.41 and a beta of 0.48. The stock's 50 day moving average is $7.87 and its two-hundred day moving average is $8.28.

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

Hedge Funds Weigh In On Arcos Dorados

Several institutional investors have recently added to or reduced their stakes in ARCO. Engineers Gate Manager LP grew its stake in shares of Arcos Dorados by 38.1% in the 2nd quarter. Engineers Gate Manager LP now owns 139,901 shares of the restaurant operator's stock valued at $1,128,000 after purchasing an additional 38,621 shares during the last quarter. Integrated Wealth Concepts LLC increased its holdings in shares of Arcos Dorados by 15.9% in the second quarter. Integrated Wealth Concepts LLC now owns 81,779 shares of the restaurant operator's stock valued at $659,000 after purchasing an additional 11,244 shares during the period. Squarepoint Ops LLC purchased a new stake in shares of Arcos Dorados during the second quarter worth approximately $81,000. Baird Financial Group Inc. purchased a new stake in shares of Arcos Dorados during the second quarter worth approximately $87,000. Finally, Public Employees Retirement System of Ohio purchased a new stake in shares of Arcos Dorados during the second quarter worth approximately $31,000. Institutional investors and hedge funds own 55.91% of the company's stock.

About Arcos Dorados

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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