Arcos Dorados (NYSE:ARCO) Stock Price Down 6.5% - Here's Why

Key Points

• Arcos Dorados shares fell 6.5% to about $6.69, with trading volume 31% above average.
• Analyst sentiment remains generally positive: the stock has a “Moderate Buy” consensus rating and a $10.50 average price target, despite recent downgrades from Weiss Ratings and Zacks Research.
• The company recently exceeded quarterly expectations, reporting $0.22 in earnings per share versus the $0.15 consensus and revenue of $1.31 billion versus estimates of $1.28 billion.

Shares of Arcos Dorados Holdings Inc. (NYSE:ARCO - Get Free Report) dropped 6.5% on Thursday. The company traded as low as $6.71 and last traded at $6.6850. 1,684,212 shares traded hands during trading, an increase of 31% from the average session volume of 1,286,034 shares. The stock had previously closed at $7.15.

Wall Street Analyst Weigh In

ARCO has been the topic of a number of recent analyst reports. Weiss Ratings downgraded shares of Arcos Dorados from a "hold (c)" rating to a "hold (c-)" rating in a research report on Monday, September 14th. Zacks Research downgraded shares of Arcos Dorados from a "strong-buy" rating to a "hold" rating in a report on Monday, August 10th. Finally, JPMorgan Chase & Co. raised Arcos Dorados from a "neutral" rating to an "overweight" rating and increased their price objective for the stock from $9.00 to $10.50 in a research note on Friday, July 17th. Three research analysts have rated the stock with a Buy rating and two have assigned a Hold rating to the stock. According to MarketBeat.com, Arcos Dorados has a consensus rating of "Moderate Buy" and an average price target of $10.50.

Arcos Dorados Trading Down 5.2%

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 stock's 50 day simple moving average is $7.94 and its 200 day simple moving average is $8.28. The firm has a market cap of $1.43 billion, a PE ratio of 5.57 and a beta of 0.49.

Arcos Dorados (NYSE:ARCO - Get Free Report) last posted its earnings results on Friday, August 14th. The restaurant operator reported $0.22 earnings per share for the quarter, topping 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 during the quarter, compared to analyst estimates of $1.28 billion. On average, sell-side analysts forecast that Arcos Dorados Holdings Inc. will post 0.79 earnings per share for the current fiscal year.

Institutional Inflows and Outflows

Large investors have recently bought and sold shares of the business. DGS Capital Management LLC raised its holdings in shares of Arcos Dorados by 10.6% during the 4th quarter. DGS Capital Management LLC now owns 13,481 shares of the restaurant operator's stock worth $99,000 after acquiring an additional 1,290 shares during the period. NewEdge Wealth LLC grew its stake in shares of Arcos Dorados by 13.2% in the first quarter. NewEdge Wealth LLC now owns 20,289 shares of the restaurant operator's stock valued at $167,000 after buying an additional 2,360 shares in the last quarter. Confluence Investment Management LLC increased its stake in Arcos Dorados by 21.0% during the second quarter. Confluence Investment Management LLC now owns 21,798 shares of the restaurant operator's stock worth $176,000 after purchasing an additional 3,783 shares during the period. Public Employees Retirement System of Ohio purchased a new position in Arcos Dorados in the 2nd quarter valued at approximately $31,000. Finally, FNY Investment Advisers LLC acquired a new stake in Arcos Dorados in the 2nd quarter valued at about $40,000. 55.91% of the stock is owned by hedge funds and other institutional investors.

About Arcos Dorados

Arcos Dorados Holdings Inc is the largest independent McDonald's franchisee in the world and operates McDonald's restaurants across Latin America and the Caribbean. The company holds the exclusive right to own, operate and franchise McDonald's restaurants in numerous markets throughout the region.

Its restaurants offer McDonald's core menu of hamburgers, cheeseburgers, chicken products, french fries, breakfast items, beverages and desserts, along with regionally adapted products. Arcos Dorados also serves customers through drive-thru locations, delivery, mobile ordering and other digital channels.

Arcos Dorados was established in 2007 following the acquisition of McDonald's operations in Latin America from McDonald's Corporation.

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