Should Value Investors Buy Arcos Dorados (ARCO) Stock?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
Arcos Dorados (ARCO) is a stock many investors are watching right now. ARCO is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 13.21, which compares to its industry's average of 23.27. Over the past 52 weeks, ARCO's Forward P/E has been as high as 276.72 and as low as 12.30, with a median of 17.48.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. ARCO has a P/S ratio of 0.48. This compares to its industry's average P/S of 1.18.
Finally, we should also recognize that ARCO has a P/CF ratio of 6.69. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 16.70. Within the past 12 months, ARCO's P/CF has been as high as 10.44 and as low as 3.59, with a median of 6.85.
The ONE Group Hospitality (STKS) may be another strong Retail - Restaurants stock to add to your shortlist. STKS is a # 2 (Buy) stock with a Value grade of A.
Furthermore, The ONE Group Hospitality holds a P/B ratio of 3.32 and its industry's price-to-book ratio is -18.86. STKS's P/B has been as high as 9.55, as low as 3.11, with a median of 5.08 over the past 12 months.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Arcos Dorados and The ONE Group Hospitality are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ARCO and STKS feels like a great value stock at the moment.
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Arcos Dorados Holdings Inc. (ARCO) : Free Stock Analysis Report
The ONE Group Hospitality, Inc. (STKS) : Free Stock Analysis Report
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