Is Arcos Dorados (ARCO) a Great Value Stock Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company value investors might notice is Arcos Dorados (ARCO). ARCO is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 11.22, while its industry has an average P/E of 22.90. Over the past 52 weeks, ARCO's Forward P/E has been as high as 17.05 and as low as 10.55, with a median of 12.99.
ARCO is also sporting a PEG ratio of 0.99. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ARCO's industry has an average PEG of 1.62 right now. ARCO's PEG has been as high as 1.62 and as low as 0.36, with a median of 1.23, all within the past year.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. ARCO has a P/S ratio of 0.53. This compares to its industry's average P/S of 0.91.
Finally, we should also recognize that ARCO has a P/CF ratio of 6.96. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. ARCO's current P/CF looks attractive when compared to its industry's average P/CF of 17.28. Over the past year, ARCO's P/CF has been as high as 8.07 and as low as 5.42, with a median of 6.68.
Another great Retail - Restaurants stock you could consider is El Pollo Loco (LOCO), which is a # 2 (Buy) stock with a Value Score of A.
Furthermore, El Pollo Loco holds a P/B ratio of 1.19 and its industry's price-to-book ratio is -24.83. LOCO's P/B has been as high as 1.69, as low as 0.99, with a median of 1.23 over the past 12 months.
These are only a few of the key metrics included in Arcos Dorados and El Pollo Loco strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, ARCO and LOCO look like an impressive value stock at the moment.
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Arcos Dorados Holdings Inc. (ARCO) : Free Stock Analysis Report
El Pollo Loco Holdings, Inc. (LOCO) : Free Stock Analysis Report
