Arcos Story

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ARCO -- USA Stock  

USD 5.39  0.03  0.55%

Arcos Dorados Holdings is scheduled to announce its earnings today. The next earnings report is expected on the 12th of May 2021. Arcos Dorados Current Ratio is quite stable at the moment as compared to the past year. The company's current value of Current Ratio is estimated at 0.70. Dividend Yield is expected to rise to 0.0201 this year, although the value of Average Assets will most likely fall to about 1.7 B. As many baby boomers are still indifferent towards consumer cyclical space, it makes sense to outline Arcos Dorados Holdings as a unique choice for millenniums.
Published over a month ago
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How much will Arcos Dorados owe in April?
Arcos Dorados Holdings currently holds 1.55 B in liabilities with Debt to Equity (D/E) ratio of 9.98, indicating Arcos Dorados may have difficulties to generate enough cash to satisfy its financial obligations. The entity has a current ratio of 0.76, indicating that it has a negative working capital and may not be able to pay financial obligations when due.
Arcos Dorados financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Arcos Dorados, including all of Arcos Dorados's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Arcos Dorados assets, the company is considered highly leveraged. Understanding the composition and structure of overall Arcos Dorados debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it.
Please read more on our technical analysis page.

Understanding Arcos Total Debt

Arcos Dorados Holdings liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Arcos Dorados Holdings has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Arcos Dorados balance sheet include debt obligations and money owed to different Arcos Dorados vendors, workers, and loan providers. Below is the chart of Arcos main long-term debt accounts currently reported on its balance sheet.
You can use Arcos Dorados Holdings financial leverage analysis tool to get a better grip on understanding its financial position

How important is Arcos Dorados's Liquidity

Arcos Dorados financial leverage refers to using borrowed capital as a funding source to finance Arcos Dorados Holdings ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Arcos Dorados financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Arcos Dorados's total debt and its cash.

Is Arcos Dorados valued adequately by the market?

The latest indifference towards the small price fluctuations of Arcos Dorados Holdings could raise concerns from institutional investors as the firm it trading at a share price of 5.30 on 600,835 in volume. The company directors and management did not add any value to Arcos Dorados investors in February. However, most investors can still diversify their portfolios with Arcos Dorados Holdings to hedge their inherited risk against high-volatility market scenarios. The stock standard deviation of daily returns for 30 days investing horizon is currently very low. The very small Stock volatility is a good signal to institutional investors with longer-term investment horizons.

Liabilities Breakdown

Tax Liabilities
526 M
Current Liabilities
1.9 B
Long-Term Liabilities
Total Liabilities2.07 Billion
Current Liabilities526.01 Million
Long-Term Liabilities1.91 Billion
Tax Liabilities115.09 Million

Possible April correction of Arcos?

The mean deviation is down to 2.04 as of today. Arcos Dorados Holdings currently demonstrates below-average downside deviation. It has Information Ratio of -0.02 and Jensen Alpha of -0.08. However, we advise investors to further question Arcos Dorados Holdings expected returns to ensure all indicators are consistent with the current outlook about its relatively low value at risk. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Arcos Dorados' stock risk against market volatility during both bullying and bearish trends. The higher level of volatility that comes with bear markets can directly impact Arcos Dorados' stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.

Our Final Takeaway

When is the right time to buy or sell Arcos Dorados Holdings? Buying stocks such as Arcos Dorados isn't very hard. However, what challenging for most investors is doing it at the right time. Proper market timing is something most people cannot do without sophisticated tools, which help to isolate the right opportunities, deliver winning trades and diversify portfolios on a daily basis.
All things considered, as of the 17th of March 2021, we believe Arcos Dorados is currently undervalued. It almost neglects market trends and projects close to average odds of distress in the next two years. Our up-to-date 30 days buy-or-sell advice on the company is Strong Hold.

About Contributor

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Raphi Shpitalnik do not own shares of Arcos Dorados Holdings. Please refer to our Terms of Use for any information regarding our disclosure principles.

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