ARCO

Rating neutralTentativeAI MemoPost-earnings T+3

Arcos Dorados

As of 2026-05-23/Post-earnings T+3/Confidence medium

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Data freshness

AI Memo

As of 2026-05-23 • Model: RankAlpha Sentiment Codex

Decision Panel

Action, confidence, horizon, and decision blockers at a glance.

Report quality notice

later post-earnings follow-up lacks concrete company-source and analyst/market reaction evidence

Action

neutral

Confidence

medium

Horizon

—

Key catalyst

Q1 2026 results showed strong comps, EBITDA, and cash-flow improvement • 2026-05-20

Expected move: +12%

Biggest risk

The company still leans on LatAm macro and FX conditions, the release does not provide a crisp numeric 2026 guide, and some of the quarter's benefit came from financing and FX items; if comps normalize or costs re-accelerate, the rerating case fades.

Invalidation

Break below $7 or thesis failure.

What would change my mind?

Q1 showed the operating engine working: traffic and comp sales were strong, digital sales rose about 21%, modernized restaurants reached 75% of the system, and EBITDA/cash flow improved materially; if that execution holds through 2026, earnings quality should stay better than in prior periods [#6K-2026-05-20].

Research note

Recommendation

neutral

Confidence

medium

As of

2026-05-23

Base target

$10

p=50%

Bull target

$12

p=25%

Bear target

p=25%

Key bullets

Fast scan of bull, bear, and watch items

BullKey bullets

Initial post-print enthusiasm can fade if LatAm FX, inflation, or traffic normalize
Digital mix and restaurant modernization can keep the operating run-rate elevated
Q1 showed the operating engine working: traffic and comp sales were strong, digital sales rose about 21%, modernized restaurants reached 75% of the system, and EBITDA/cash flow improved materially; if that execution holds through 2026, earnings quality should stay better than in prior periods [#6K-2026-05-20].

BearKey bullets

FX, inflation, and broader LatAm demand swings can erase the operating improvement.
Margin gains may not persist if guest traffic or average checks normalize after a strong quarter.
No explicit numeric 2026 guidance reset in the May 20 release, which limits forward visibility after the earnings event.

WatchKey bullets

Q1 2026 results showed strong comps, EBITDA, and cash-flow improvement

Summary

High-level snapshot

Recommendation

neutral

Model confidence

medium

Timeframe

Asset

Equity

Trigger

Post-earnings T+3

Base case: $10 (p=50%)

Bull/Bear spread: +29% / -19%

Vs latest close: Bull +29% · Base +12% · Bear -19%

Scenario probabilities

Bull Target: $12 (p=25%)Base Target: $10 (p=50%)Bear Target: $7 (p=25%)

Commentary

Primary-source retrieval confirms the May 20, 2026 SEC 6-K and its company press-release exhibit, including the Q1 revenue, comp-sales, EBITDA, margin, EPS, digital-sales, and unit-growth figures [#6K-2026-05-20]. Secondary market coverage reported an initial positive reaction after the EPS beat, but the May 22 anchor price of $8.75 shows the immediate enthusiasm was not cleanly sustained. Analyst-revision evidence remains sparse for a T+3 follow-up, so the report stays tentative and monitoring-oriented despite the stronger operating print.

As of 2026-05-23 • Updated bi-weekly / post-earningsSource: Internal modelMethodology

Analyst Summary

Thesis highlights from the latest analysis

Bull Case

Bear Case

Drivers

Scannable catalysts and supporting factors

Initial post-print enthusiasm can fade if LatAm FX, inflation, or traffic normalize
Digital mix and restaurant modernization can keep the operating run-rate elevated

Scenarios

Bull Target (Scenario probability)

$12 / p=25% prob

Base Target (Scenario probability)

$10 / p=50% prob

Bear Target (Scenario probability)

$7 / p=25% prob

Price $9 as of 2026-05-27

Nearest Scenario: Base (∆ 12%)

Targets vs latest close: Bull +29% · Base +12% · Bear -19%

Sentiment & Exposure

Sentiment unavailable: insufficient coverage

Events

Other notable items detected

EVENT2026-05-20
Q1 2026 results showed strong comps, EBITDA, and cash-flow improvement
The May 20 SEC Form 6-K press-release exhibit reported total revenue of $1.216B (+12.9% y/y), systemwide comparable sales of 16.0%, Adjusted EBITDA of $118.0M (+29.3%), EPS of $0.17 vs. $0.07, and 120 bp of EBITDA-margin expansion. Secondary earnings coverage framed the print as an EPS beat with a small revenue-estimate debate, so the event is constructive but not enough by itself to remove monitoring risk [#6K-2026-05-20].
Prob 75.00% • Move 5.00% • Priced-in 65.00%

Short-term Catalysts

Next few weeks

Initial post-print enthusiasm can fade if LatAm FX, inflation, or traffic normalize
2026-08-20
The filing reiterates that forward-looking statements remain subject to business risks and uncertainties, and the post-print tape was mixed: secondary coverage reported an initial premarket rally after the EPS beat, while the stock closed at $8.75 on May 22 after pulling back from the immediate reaction. For a LatAm-exposed QSR operator, FX volatility, inflation, and normalization in guest traffic remain the main ways the market could fade the Q1 improvement [#6K-2026-05-20].
Prob 55% • Move -7% • Priced-in 45%

Long-term Catalysts

Months to a year

Digital mix and restaurant modernization can keep the operating run-rate elevated
2026-12-31
Management said digital channel sales rose about 21% and represented 64% of systemwide sales, while 75% of restaurants now offer the most modern experience and 19 restaurants were opened in the quarter. If digital ordering, loyalty, delivery, and kiosk adoption continue to support guest frequency and average check, the Q1 margin bridge has a clearer path to persist through 2026 [#6K-2026-05-20].
Prob 60% • Move 8% • Priced-in 40%

Risks

FX, inflation, and broader LatAm demand swings can erase the operating improvement.
Margin gains may not persist if guest traffic or average checks normalize after a strong quarter.
No explicit numeric 2026 guidance reset in the May 20 release, which limits forward visibility after the earnings event.
Post-print analyst revision evidence is limited, so missing revisions should be treated as an evidence gap rather than positive confirmation.
The quarter included sub-franchisee transaction items and reorganization and optimization adjustments, so non-GAAP comparability is imperfect.

Peers

Symbol	Summary
CHA	Closest supplied same-sector growth-chain comparator for unit expansion and brand execution, though geography and menu mix differ materially.
FUN	Useful consumer-spending and traffic-sensitivity check, but it is not an operational restaurant peer.
MCRI	A discretionary-consumer margin and demand comparator, but the business model is much less similar.

Sources

Internal and external references used in this analysis

Model source: RankAlpha Sentiment Codex
Human targets: serper
Analysis date: 2026-05-23

AI Stock Memo: ARCO - Arcos Dorados - RankAlpha