Earnings To Watch: Arcos Dorados (ARCO) Reports Q1 Results Tomorrow

Fast-food chain Arcos Dorados (NYSE:ARCO) will be announcing earnings results tomorrow before market open. Here's what investors should know.

Arcos Dorados met analysts' revenue expectations last quarter, reporting revenues of $1.18 billion, up 15.4% year on year. It was a mixed quarter for the company: Arcos Dorados narrowly topped analysts' revenue and EPS expectations. On the other hand, its gross margin missed analysts' expectations.

Is Arcos Dorados a buy or sell going into earnings? Read our full analysis here, it's free.

This quarter, analysts are expecting Arcos Dorados's revenue to grow 3.4% year on year to $1.02 billion, slowing from the 25.3% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.15 per share.

The majority of analysts covering the company have reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Arcos Dorados has a history of exceeding Wall Street's expectations, beating revenue estimates every single time over the past two years by 3.9% on average.

Looking at Arcos Dorados's peers in the traditional fast food segment, some have already reported their Q1 results, giving us a hint as to what we can expect. Papa John's revenues decreased 2.5% year on year, missing analysts' expectations by 5.4%, and Yum! Brands reported a revenue decline of 2.9%, falling short of estimates by 6.6%. Papa John's traded flat following the results while Yum! Brands was also down 5.8%.

Read our full analysis of Papa John's results here and Yum! Brands's results here.

There has been positive sentiment among investors in the traditional fast food segment, with share prices up 4.4% on average over the last month. Arcos Dorados is up 5.2% during the same time and is heading into earnings with an average analyst price target of $14.1 (compared to the current share price of $11.47).

When a company has more cash than it knows what to do with, buying back its own shares can make a lot of sense–as long as the price is right. Luckily, we’ve found one, a low-priced stock that is gushing free cash flow AND buying back shares. Click here to claim your Special Free Report on a fallen angel growth story that is already recovering from a setback.