Stock Story -
Fast-food chain Arcos Dorados (NYSE:ARCO) beat analysts’ expectations in Q2 CY2024, with revenue up 6.8% year on year to $1.11 billion. Its GAAP profit of $0.13 per share was flat year on year.
Is now the time to buy Arcos Dorados? Find out by reading the original article on StockStory, it’s free.
Arcos Dorados (ARCO) Q2 CY2024 Highlights:
- Revenue: $1.11 billion vs analyst estimates of $1.06 billion (5% beat)
- EPS: $0.13 vs analyst expectations of $0.13 (in line)
- Gross Margin (GAAP): 12.8%, in line with the same quarter last year
- EBITDA Margin: 10.7%, in line with the same quarter last year
- Locations: 2,395 at quarter end, up from 2,317 in the same quarter last year
- Same-Store Sales rose 40.8% year on year (27.7% in the same quarter last year)
- Market Capitalization: $2.13 billion
Traditional Fast FoodTraditional fast-food restaurants are renowned for their speed and convenience, boasting menus filled with familiar and budget-friendly items. Their reputations for on-the-go consumption make them favored destinations for individuals and families needing a quick meal. This class of restaurants, however, is fighting the perception that their meals are unhealthy and made with inferior ingredients, a battle that's especially relevant today given the consumers increasing focus on health and wellness.
Sales GrowthArcos Dorados is one of the larger restaurant chains in the industry and benefits from a strong brand, giving it customer mindshare and influence over purchasing decisions.
As you can see below, the company’s annualized revenue growth rate of 8.9% over the last five years was decent as it opened new restaurants and grew sales at existing, established dining locations.
This quarter, Arcos Dorados reported solid year-on-year revenue growth of 6.8%, and its $1.11 billion in revenue outperformed Wall Street’s estimates by 5%.
Same-Store SalesArcos Dorados has been one of the most successful restaurants over the last two years thanks to skyrocketing demand within its existing locations. On average, the company has posted exceptional year-on-year same-store sales growth of 34.1%. This performance suggests its steady rollout of new restaurants is beneficial for shareholders. When a chain has strong demand, more locations should help it reach more customers seeking its meals.
In the latest quarter, Arcos Dorados’s same-store sales rose 40.8% year on year. This growth was an acceleration from the 27.7% year-on-year increase it posted 12 months ago, which is always an encouraging sign.
Key Takeaways from Arcos Dorados’s Q2 ResultsWe were impressed by how significantly Arcos Dorados blew past analysts’ revenue expectations this quarter. On the other hand, its gross margin missed analysts’ expectations. Zooming out, we think this was a decent quarter featuring some areas of strength but also some blemishes. The stock traded up 1.9% to $10.30 immediately after reporting.
![Arcos Dorados’s (NYSE:ARCO) Q2: Beats On Revenue](https://d68-invdn-com.investing.com/content/pic737f3e2278085da2f5d9ad099a1cf85c.jpeg)