Arcos Dorados (NYSE:ARCO) Posts Quarterly Earnings Results, Beats Estimates By $0.01 EPS

Arcos Dorados (NYSE:ARCO) posted its earnings results on Thursday. The restaurant operator reported $0.15 EPS for the quarter, beating the consensus estimate of $0.14 by $0.01, FiscalAI reports. The company had revenue of $1.33 billion during the quarter, compared to analyst estimates of $1.32 billion. Arcos Dorados had a return on equity of 12.50% and a net margin of 5.15%.

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 Price Performance

Shares of Arcos Dorados stock traded up $0.14 on Friday, hitting $7.13. The company had a trading volume of 596,753 shares, compared to its average volume of 1,437,818. Arcos Dorados has a 52 week low of $6.67 and a 52 week high of $9.75. The company has a debt-to-equity ratio of 1.14, a current ratio of 0.88 and a quick ratio of 0.81. The company has a market cap of $1.50 billion, a PE ratio of 5.86 and a beta of 0.54. The business has a 50-day simple moving average of $7.54 and a 200-day simple moving average of $8.17.

Analysts Set New Price Targets

ARCO has been the subject of a number of analyst reports. Bank of America lowered Arcos Dorados from a “buy” rating to a “neutral” rating and set a $9.00 price objective for the company. in a research report on Monday, October 26th. Wall Street Zen raised Arcos Dorados from a “hold” rating to a “buy” rating in a research report on Saturday, November 7th. JPMorgan Chase & Co. cut their target price on Arcos Dorados from $10.50 to $10.00 and set an “overweight” rating on the stock in a research note on Tuesday. Zacks Research upgraded Arcos Dorados from a “hold” rating to a “strong-buy” rating in a research note on Tuesday, October 20th. Finally, Weiss Ratings raised shares of Arcos Dorados from a “hold (c-)” rating to a “hold (c)” rating in a report on Thursday, October 8th. One equities research analyst has rated the stock with a Strong Buy rating, three have given a Buy rating and two have issued a Hold rating to the company. According to data from MarketBeat, Arcos Dorados presently has an average rating of “Moderate Buy” and an average target price of $9.50.

Key Headlines Impacting Arcos Dorados

Investors following ARCO have been watching these headlines:

• Positive Sentiment: The company outlined plans for 550–600 restaurant openings and $1.3 billion–$1.5 billion in capital expenditures from 2027 through 2030, signaling continued expansion. It also announced a $25 million buyback, which could support shareholder returns. Expansion Plans and Buyback
• Negative Sentiment: A separate report characterized third-quarter income as retreating, a caution alongside the per-share earnings and revenue beats. Q3 Income Retreats
• Negative Sentiment: JPMorgan cut its price target for ARCO, potentially weighing on investor sentiment; the provided report does not specify the revised target. JPMorgan Cuts Price Target

Arcos Dorados Company Profile

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.