Our latest technical analysis of Arcos Dorados Holdings (NYSE:ARCO)


USD 6.91  0.16  2.37%   

As many millenniums are excited about consumer cyclical space, it is only fair to outline Arcos Dorados Holdings against current market trends. As expected, Arcos Dorados is starting to reaffirm its true potential as institutional investors are becoming more and more confident in the future outlook. The company returns are very sensitive to each other to returns on the market. As market twists, the company is expected to follow. The proof of persistent fundamental indicators of the company suggests a short-term price swing for institutional investors of Arcos. Arcos Dorados Holdings is scheduled to announce its earnings today.
Published over three months ago
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This firm's average rating is Buy from 3 analysts. Do analysts base this consensus on technical analyses? We know that typical technical analysis utilizes price momentum, patterns, and trends looking at historical prices. It aims to identify signals based on Arcos Dorados market sentiment investors' perception of the future value of Arcos. Let us look at a few aspects of Arcos technical analysis.
Using predictive technical analysis, we will analyze different prices and returns patterns and diagnose historical swings to determine the real value of Arcos Dorados Holdings. In general, we focus on analyzing Arcos Dorados stock price patterns and their correlations with different microeconomic environment and drivers. We also apply predictive analytics to build Arcos Dorados's daily price indicators and compare them against related drivers such as momentum indicators and various other types of predictive indicators. Using this methodology combined with a more conventional technical analysis and fundamental analysis, we attempt to find the most accurate representation of Arcos Dorados's intrinsic value. In addition to deriving basic predictive indicators for Arcos Dorados, we also check how macroeconomic factors affect Arcos Dorados price patterns. Please read more on our technical analysis page or use our predictive modules below to complement your research.
Sophisticated investors, who have witnessed many market ups and downs, frequently view the market will even out over time. This tendency of Arcos Dorados' price to converge to an average value over time is called mean reversion. However, historically, high market prices usually discourage investors that believe in mean reversion to invest, while low prices are viewed as an opportunity to buy. Please use the tools below to analyze the current value of Arcos Dorados in the context of predictive analytics.
Please note, it is not enough to conduct a financial or market analysis of a single entity such as Arcos Dorados. Your research has to be compared to or analyzed against Arcos Dorados' peers to derive any actionable benefits. When done correctly, Arcos Dorados' competitive analysis will give you plenty of quantitative and qualitative data to validate your investment decisions or develop an entirely new strategy towards taking a position in Arcos Dorados Holdings.

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.

How does Arcos utilize its cash?

To perform a cash flow analysis of Arcos Dorados, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Arcos Dorados is receiving and how much cash it distributes out in a given period. The Arcos Dorados cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.

Closer look at Arcos Dorados Standard Deviation

Arcos Dorados Holdings has current Standard Deviation of 2.79. The Standard Deviation is a measure of how spread out the prices or returns of an asset are on average. It is the most widely used risk indicator in the field of investing and finance. Standard Deviation is commonly used to measure confidence in statistical conclusions regarding certain equity instruments or portfolios of equities.

Standard deviation is applied to the annual rate of return of an investment to measure the investment's volatility. Standard deviation is also known as historical volatility and is used by investors as a gauge for the amount of expected market volatility. A large standard deviation usually indicates that the data points are far from the mean and a small standard deviation indicates that they are clustered closely around the mean.

Standard Deviation 
SQRT = Square root notation
V =   Variance of Arcos Dorados returns

Some Arcos technical indicators suggest correction

The jensen alpha is down to 0.25 as of today. Arcos Dorados Holdings currently demonstrates below-average downside deviation. It has Information Ratio of 0.09 and Jensen Alpha of 0.25. 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.

Arcos Dorados Implied Volatility

Arcos Dorados' implied volatility exposes the market's sentiment of Arcos Dorados Holdings stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Arcos Dorados' implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that Arcos Dorados stock will not fluctuate a lot when Arcos Dorados' options are near their expiration.

Our Conclusion on Arcos Dorados

Whereas many other companies within the restaurants industry are still a little expensive, even after the recent corrections, Arcos Dorados may offer a potential longer-term growth to institutional investors. With a somewhat neutral outlook on your 90 days horizon, it may be better to hold off any trading activity and neither take up new shares of Arcos nor quit your existing holdings in the Stock. It seems the expected volatility has not yet been fully factored into the current price. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Arcos Dorados.

Editorial Staff

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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