Arcos Dorados Holdings Inc.'s ARCO first-quarter 2025 earnings missed the Zacks Consensus Estimate but revenues beat the same. On a year-over-year basis, the bottom line grew while the top line tumbled.

During the quarter, management highlighted the impact of adverse foreign currency translation effects and macroeconomic pressures in several key markets. While revenues in constant currency grew year over year, U.S. dollar-denominated figures were dragged down by weaker local currencies, especially in Brazil and Argentina. Additionally, cautious consumer spending across Latin America limited traffic growth at its restaurants.

Following the results, the company's shares lost 5.6% during trading hours yesterday.

ARCO’s Q1 in Detail

The company reported adjusted earnings per share (EPS) of 7 cents, which lagged the Zacks Consensus Estimate of 13 cents by 46.2%. In the year-ago quarter, it reported an adjusted EPS of 14 cents. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Arcos Dorados Holdings Inc. Price, Consensus and EPS SurpriseArcos Dorados Holdings Inc. Price, Consensus and EPS Surprise

Arcos Dorados Holdings Inc. price-consensus-eps-surprise-chart | Arcos Dorados Holdings Inc. Quote

The quarterly revenues of $1.08 billion topped the consensus mark of $1.07 billion by 0.9% but declined 0.4% year over year. The performance was tempered by calendar effects such as Leap Day and Holy Week, and significantly impacted by currency depreciation in several key markets. On a constant currency basis, the quarterly revenues grew 14.1% from last year’s quarter.

In the first quarter, the company’s systemwide comparable sales grew 11.1% year over year compared with 21.5% growth reported in the prior-year quarter. The quarter’s digital sales increased 6.3% year over year.

Arcos Dorados’ Q1 Operating Highlights

During the first quarter, food and paper costs came in at $366.6 million compared with $360.9 million reported in the prior-year quarter. General and administrative expenses were up 6.8% year over year to $73.3 million.

The operating income was $45.1 million compared with $67.6 million reported in the prior-year quarter.

Adjusted EBITDA during the quarter came in at $91.3 million compared with $108.9 million reported in the prior-year quarter. The adjusted EBITDA margin contracted 160 basis points (bps) year over year to 8.5%.

Balance Sheet of ARCO

As of March 31, 2025, Arcos Dorados had total cash and cash equivalents of $404.6 million, up from $135.1 million at 2024-end.

Total financial debt as of March 31, 2025, was $1.16 billion, up from $707.6 million as of 2024-end.

Story Continues

Store Development of Arcos Dorados

In the first quarter of 2025, Arcos Dorados expanded its footprint by adding 12 new Experience of the Future (EOTF) restaurants, including 10 free-standing units. By the end of March 2025, it operated a total of 1,669 EOTF restaurants, representing 68% of its overall restaurant portfolio. The company aims to ramp up its development pace throughout the year to meet its full-year target of opening 90 to 100 new locations.

ARCO’s Zacks Rank

Arcos Dorados currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

Recent Retail-Wholesale Releases

Domino's Pizza, Inc. DPZ reported first-quarter fiscal 2025 results with earnings beating the Zacks Consensus Estimate, while revenues missed the same. The company reported adjusted EPS of $4.33, up from $3.58 reported in the year-ago quarter. Revenues of $1.11 billion increased 2.5% on a year-over-year basis.

Domino's reported benefits from the Hungry for MORE strategy during the quarter, registering growth in market share across the U.S. and international segments. DPZ continued to manage controllable factors well despite a tough global environment. The strategy supported an increase in sales, store openings and profits. These factors are important for long-term value creation for franchisees and shareholders.

Brinker International, Inc. EAT reported third-quarter fiscal 2025 results, with earnings and revenues beating the Zacks Consensus Estimate. The company reported adjusted EPS of $2.66, up from $1.24 reported in the year-ago quarter. Revenues of $1.43 billion increased 27.2% on a year-over-year basis.

Brinker’s quarterly performance benefited from strong fundamentals, leading to better guest experience and steady business growth. The ongoing increase in traffic continues to drive the company’s performance.

YUM! Brands, Inc. YUM reported first-quarter 2025 results, with adjusted earnings beating the Zacks Consensus Estimate and revenues missing the same. The company reported adjusted EPS of $1.30, up from $1.15 reported in the year-ago quarter. Revenues of $1.79 billion increased 12% on a year-over-year basis.

The company’s performance reflects solid contributions from the KFC and Taco Bell divisions. On the digital front, it reported meaningful progress, with digital sales nearing $9 billion and accounting for 55% of total sales. Franchisee feedback on Yum!’s proprietary digital platform, Byte by Yum!, remained positive, reinforcing the brand’s strategic push toward tech-driven growth.

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