Should Value Investors Buy Arcos Dorados (ARCO) Stock?
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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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.
One company value investors might notice is Arcos Dorados (ARCO). ARCO is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with P/E ratio of 14.34 right now. For comparison, its industry sports an average P/E of 25.36. ARCO's Forward P/E has been as high as 17.05 and as low as 10.55, with a median of 13.14, all within the past year.
We also note that ARCO holds a PEG ratio of 1.51. 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 PEG compares to its industry's average PEG of 1.83. Within the past year, ARCO's PEG has been as high as 1.62 and as low as 0.36, with a median of 1.16.
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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. ARCO has a P/S ratio of 0.61. This compares to its industry's average P/S of 1.09.
Finally, investors should note that ARCO has a P/CF ratio of 8.46. 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. This stock's P/CF looks attractive against its industry's average P/CF of 20.50. Over the past year, ARCO's P/CF has been as high as 8.46 and as low as 5.42, with a median of 6.64.
If you're looking for another solid Retail - Restaurants value stock, take a look at Dave & Buster's Entertainment (PLAY). PLAY is a # 1 (Strong Buy) stock with a Value score of A.
Shares of Dave & Buster's Entertainment are currently trading at a forward earnings multiple of 11.78 and a PEG ratio of 0.68 compared to its industry's P/E and PEG ratios of 25.36 and 1.83, respectively.
PLAY's Forward P/E has been as high as 16.31 and as low as 9.08, with a median of 10.84. During the same time period, its PEG ratio has been as high as 0.81, as low as 0.61, with a median of 0.73.
Furthermore, Dave & Buster's Entertainment holds a P/B ratio of 6.28 and its industry's price-to-book ratio is -23.73. PLAY's P/B has been as high as 6.28, as low as 3.93, with a median of 4.97 over the past 12 months.
Value investors will likely look at more than just these metrics, but the above data helps show that Arcos Dorados and Dave & Buster's Entertainment are likely undervalued currently. And when considering the strength of its earnings outlook, ARCO and PLAY sticks out as one of the market's strongest value stocks.
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Arcos Dorados Holdings Inc. (ARCO) : Free Stock Analysis Report
Dave & Buster's Entertainment, Inc. (PLAY) : Free Stock Analysis Report
