It's tough to grow a business when two large markets are convulsing
under the weight of horrible macroeconomic mismanagement, but Arcos Dorados (ARCO)
isn't going to get a free pass just because the problems in Argentina
and Venezuela are not its fault. Inflation, affordability, and
competition remain challenges across the company's operations and I
don't fault investors who want nothing to do with another Latin American
consumer stock groaning under the weight of macroeconomic issues.
The shares of Arcos Dorados are down about 10% from when I last wrote,
and the story remains frustratingly similar. There is significant
growth potential in the business, as it could double the number of McDonald's (MCD) stores it operates over the next decade, but potential isn't worth much if the actual results don't get better.
Read the full article here:
Arcos Dorados Still Several Fries Short Of A Happy Meal
Showing posts with label Alsea. Show all posts
Showing posts with label Alsea. Show all posts
Thursday, March 13, 2014
Thursday, January 16, 2014
Seeking Alpha: Arcos Dorados Stronger Than Its Stock
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
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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