It's cold comfort for shareholders, but it seems like Arcos Dorados (ARCO)
has gotten sucked into the same "anti-polar" vortex as many other
consumer-oriented Latin American stocks. With the USD/BRL exchange rate
moving from 2.03 to 2.37 over the past year and the USD / MXN rate
moving from 12.67 to 13.08, worries about consumer spending trends in
markets like Brazil and Mexico and the economies of Argentina and
Venezuela are almost secondary.
The good news is that, as an
operating company, Arcos Dorados is still doing pretty well. Sluggish
comp growth in Brazil is a worry, but comps have generally been picking
up and margins seem to have stabilized. I'm looking for strong comp
growth and unit expansion to drive revenue growth, and I believe the
shares are meaningfully undervalued today. All of that said, investors
are going to have to be able to deal patiently with the ups and downs of
currency movements or take a more aggressive view towards entering,
exiting, and re-entering the shares.
Follow this link for more:
Arcos Dorados Stronger Than Its Stock
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