U.S. Markets open in 4 hrs 59 mins
  • S&P Futures

    3,828.00
    +2.50 (+0.07%)
     
  • Dow Futures

    30,955.00
    +22.00 (+0.07%)
     
  • Nasdaq Futures

    11,680.00
    +5.75 (+0.05%)
     
  • Russell 2000 Futures

    1,739.70
    +1.40 (+0.08%)
     
  • Crude Oil

    111.88
    +0.12 (+0.11%)
     
  • Gold

    1,817.50
    -3.70 (-0.20%)
     
  • Silver

    20.82
    -0.05 (-0.25%)
     
  • EUR/USD

    1.0516
    -0.0009 (-0.0841%)
     
  • 10-Yr Bond

    3.2060
    0.0000 (0.00%)
     
  • Vix

    28.55
    +1.60 (+5.94%)
     
  • GBP/USD

    1.2190
    +0.0005 (+0.0427%)
     
  • USD/JPY

    136.1110
    -0.0170 (-0.0125%)
     
  • BTC-USD

    20,090.79
    -787.70 (-3.77%)
     
  • CMC Crypto 200

    434.97
    -15.09 (-3.35%)
     
  • FTSE 100

    7,280.81
    -42.60 (-0.58%)
     
  • Nikkei 225

    26,804.60
    -244.87 (-0.91%)
     

Is Arcos Dorados (ARCO) Stock Undervalued Right Now?

  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

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 16.62, while its industry has an average P/E of 22.43. ARCO's Forward P/E has been as high as 276.72 and as low as 15.28, with a median of 20.14, 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 0.59. This compares to its industry's average P/S of 1.29.

Finally, investors will want to recognize that ARCO has a P/CF ratio of 9.02. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 14.52. Over the past year, ARCO's P/CF has been as high as 14.72 and as low as -283.26, with a median of 8.68.

Investors could also keep in mind Jack In The Box (JACK), an Retail - Restaurants stock with a Zacks Rank of # 2 (Buy) and Value grade of A.

Shares of Jack In The Box are currently trading at a forward earnings multiple of 10.80 and a PEG ratio of 0.64 compared to its industry's P/E and PEG ratios of 22.43 and 1.84, respectively.

JACK's Forward P/E has been as high as 17.79 and as low as 10.80, with a median of 13.27. During the same time period, its PEG ratio has been as high as 1.05, as low as 0.64, with a median of 0.78.

Furthermore, Jack In The Box holds a P/B ratio of -2.09 and its industry's price-to-book ratio is -16.89. JACK's P/B has been as high as -2.08, as low as -3.55, with a median of -2.58 over the past 12 months.

These are only a few of the key metrics included in Arcos Dorados and Jack In The Box 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 JACK look like an impressive value stock at the moment.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Arcos Dorados Holdings Inc. (ARCO) : Free Stock Analysis Report
 
Janus Henderson Sustainable & Impact Core Bond ETF (JACK) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.