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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 has a Forward P/E ratio of 13.28. This compares to its industry's average Forward P/E of 23.25. ARCO's Forward P/E has been as high as 17.05 and as low as 10.09, with a median of 12.24, all within the past year.
ARCO is also sporting a PEG ratio of 1.17. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ARCO's PEG compares to its industry's average PEG of 1.62. Over the last 12 months, ARCO's PEG has been as high as 1.62 and as low as 0.89, with a median of 1.23.
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 0.58. This compares to its industry's average P/S of 0.84.
Finally, investors will want to recognize that ARCO has a P/CF ratio of 7.66. 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. ARCO's P/CF compares to its industry's average P/CF of 17.35. 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 6.76.
Another great Retail - Restaurants stock you could consider is Carrols Restaurant Group (TAST), which is a # 1 (Strong Buy) stock with a Value Score of A.
Additionally, Carrols Restaurant Group has a P/B ratio of 2.30 while its industry's price-to-book ratio sits at -27.15. For TAST, this valuation metric has been as high as 2.39, as low as 0.43, with a median of 1.64 over the past year.
These are only a few of the key metrics included in Arcos Dorados and Carrols Restaurant Group 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 TAST look like an impressive value stock at the moment.
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Arcos Dorados Holdings Inc. (ARCO) : Free Stock Analysis Report
Carrols Restaurant Group, Inc. (TAST) : Free Stock Analysis Report
