ARCO Stock Analysis: Buy, Sell, or Hold?
ARCO - ARCOS DORADOS HOLDINGS INC.
$8.29
-0.02 (-0.18%)
▼
5d:
-2.07%
30d:
-4.66%
90d:
-4.44%
BUY
HIGH Confidence
Analysis Updated: Jul 17, 2026 12:00 AM ET
Earnings: Aug 12, 2026
25d
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Interactive Price Chart (1 Month)
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Bottom Line:
✅ BUY SIGNAL: ARCO appears deeply undervalued. Market expects -3.9% annual earnings decline despite 159% recent earnings growth. Contrarian opportunity at discount to historical valuation.
✅ BUY SIGNAL: ARCO appears deeply undervalued. Market expects -3.9% annual earnings decline despite 159% recent earnings growth. Contrarian opportunity at discount to historical valuation.
Long-Term Wealth Forecast (2031)
Based on Analyst Consensus Growth & Historical Valuation
0% (Stagnation)
50% (Hyper Growth)
EST. PRICE IN 2031
$13.02
Based on 6.8% avg growth
INTRINSIC VALUE TODAY
$8.09
Trading above historical range
How this is calculated: We use a Growth Decay Model: starting with analyst consensus growth (adjusted above) and gradually slowing it down to a long-term terminal rate (4%) by Year 5. This provides a more realistic valuation than assuming constant hyper-growth. We then apply a 10.9x Exit PE.
In-depth Analysis How we analyze
Valuation Analysis: ARCO is currently trading at $8.29, which is considered slightly high relative to its 30-day fair value range of $8.12 to $8.55. From a valuation perspective, the stock is trading at a discount (Forward PE: 9.6) compared to its historical average (10.9). Remarkably, the market is currently pricing in an annual earnings decline of 3.9% over the next few years. This pessimistic expectation contrasts with the company's recent 159.4% earnings growth, suggesting potential undervaluation if the company simply maintains stability.
Technical Outlook: Technically, ARCO is in a downtrend. The price is currently testing key support at $8.10. A bounce from this level would confirm strength, while a break below could signal further downside.
Market Sentiment: ARCO has a strong technical setup (60/100), with favorable trendlines, momentum, and price action for short-term traders. Wall Street analysts see significant upside, with an average price target of $11.15 (+34.3%). Combining these factors, the current setup offers a favorable risk/reward ratio for buyers.
Technical Outlook: Technically, ARCO is in a downtrend. The price is currently testing key support at $8.10. A bounce from this level would confirm strength, while a break below could signal further downside.
Market Sentiment: ARCO has a strong technical setup (60/100), with favorable trendlines, momentum, and price action for short-term traders. Wall Street analysts see significant upside, with an average price target of $11.15 (+34.3%). Combining these factors, the current setup offers a favorable risk/reward ratio for buyers.
Quick Decision Summary
Current Position
SLIGHTLY HIGH
Historical Trading Range
$8.12 -
$8.55
Company Quality Score
58/100
(HOLD)
Volume Confirmation
HIGH
Confidence Score
76.2%
All Signals
- BULLISH: Strong technical setup (60/100)
- BULLISH: High volume confirmation
- BULLISH: Trading 34.3% below Wall St target ($11.15)
Trading Range Analysis
30-Day Trading Range
$8.12 -
$8.55
Current vs Trading Range
SLIGHTLY HIGH
Support & Resistance Levels
Support Level
$8.10
Resistance Level
$8.64
Current Trend
Downtrend
Technical data as of
Jul 16, 2026
Fundamental Context
Forward P/E (Next Year Est.)
9.64
Wall Street Target
$11.15
(+34.3%)
Revenue Growth (YoY)
12.9%
Earnings Growth (YoY)
159.4%
Profit Margin
4.9%
Valuation Discount vs History
-3.9% cheaper
PE vs Historical
9.6 vs 10.9
CHEAP
Market-Implied Price Targets
If current PE multiple persists
Implied Growth (YoY):
-3.9%
(market-implied from PE analysis)
1-Year Target
$7.98
(-4%)
2-Year Target
$7.67
(-8%)
3-Year Target
$7.37
(-11%)
3-Yr Target (if PE normalizes)
(PE: 10→11)
$8.33
(+0%)
3-Year Scenarios
Using analyst projected EPS growth
Bull:
(PE: 21.0, Growth: 9.6%)
$23.82
(+187%)
Base:
(SPY PE: 9.6, Growth: 9.6%)
$10.94
(+32%)
Bear:
(PE: 8.2, Growth: 9.6%)
$9.30
(+12%)
📈
Valuation based on Current Earnings
Trailing PE: 7.40 | Current EPS (TTM): $1.11
Bull Case
$7.01
(-16%)
Analyst growth -22.5%, PE expands to 8.1
Base Case
$6.37
(-23%)
Market implied -22.5%, PE stable at 7.4
Bear Case
$5.59
(-33%)
Severe decline -20.0%, PE contracts to 6.3
These are projections based on PE multiples and EPS growth scenarios, not predictions. Actual results may vary significantly.
💡
Upside Surprise Potential
If earnings stabilize (0% growth), PE could expand from 9.6 to 10.9
Stabilization Target:
$9.38
(+13.0%)
PE Expansion Potential:
+13.0%
Share & Embed Analysis
Last updated: July 17, 2026 1:44 PM ET
Data refreshes hourly during market hours. Next update: 2:44 PM
Data refreshes hourly during market hours. Next update: 2:44 PM
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Technical Signals Check
Is ARCO showing a specific setup today?
Insider Activity (6 Months)
0
Buys
0
Sells
0
Net
NEUTRAL
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ARCO is a key holding in these high-performance investment strategies.
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