Yahoo Finance Should Value Investors Buy Arcos Dorados (ARCO) Stock?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 to watch right now is Arcos Dorados (ARCO). ARCO is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 11.52 right now. For comparison, its industry sports an average P/E of 24.54. Over the past year, ARCO's Forward P/E has been as high as 17.05 and as low as 10.55, with a median of 13.28.
We also note that ARCO holds a PEG ratio of 1.21. 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 currently sports an average PEG of 1.77. Over the past 52 weeks, ARCO's PEG has been as high as 1.62 and as low as 0.36, with a median of 1.11.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. ARCO has a P/S ratio of 0.47. This compares to its industry's average P/S of 1.03.
Finally, investors should note that ARCO has a P/CF ratio of 6.67. 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 19.89. Within the past 12 months, ARCO's P/CF has been as high as 7.56 and as low as 5.42, with a median of 6.52.
These are just a handful of the figures considered in Arcos Dorados's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that ARCO is an impressive value stock right now.
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
