Arcos Dorados to Report Q3 Earnings: What's in the Offing?

Core Viewpoint - Arcos Dorados Holdings Inc. (ARCO) is expected to report a decline in earnings and revenues for Q3 2024, primarily due to high costs and weakened consumer demand, particularly in Argentina [2][3]. Group 1: Earnings and Revenue Estimates - The Zacks Consensus Estimate for ARCO's earnings is 16 cents per share, reflecting a 46.7% decrease year over year [2]. - The consensus revenue estimate is $1.11 billion, which represents a 0.4% decline compared to the previous year [2]. Group 2: Factors Impacting Performance - High operational costs, including labor, utilities, and IT, are likely to have negatively affected margins across ARCO's key markets, with Mexico facing increased payroll expenses due to wage inflation [3][4]. - The company's significant investments in digital and IT infrastructure, aimed at enhancing long-term efficiency and customer experience, may have led to increased short-term operational expenses [3]. Group 3: Positive Indicators - Despite challenges, ARCO is expected to benefit from robust comparable sales, expansion efforts, and strong performance in Brazil and North Latin America, which may have contributed to positive guest traffic during the quarter [5]. - Strong digital sales are anticipated to have supported ARCO's quarterly performance [5]. Group 4: Earnings Prediction Model - Current analysis indicates that ARCO's model does not predict an earnings beat, as the Earnings ESP stands at 0.00% and the Zacks Rank is 4 (Sell) [6][7].