Should I Buy ARCO? ARCO 2026 Analysis

Should You Buy Arcos Dorados Holdings Inc (ARCO) Today? Analysis, Price Targets, and 2026 Outlook.

Conclusion

Sell

Latest Price

8.550

1 Day change

-3.93%

52 Week Range

8.970

Analysis Updated At

2026/02/04

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Not a good buy right now: ARCO is overbought (RSI-6 ~~86) and trading slightly above near-term resistance (R1 ~8.372) in pre-market (~~8.39), which skews risk/reward to the downside for an impatient entry.
Upside looks limited versus Street view: JPMorgan is Neutral with an $8.70 target (recently trimmed), leaving modest upside from current levels.
Options and forward pattern data are mixed-to-negative near-term: call-heavy open interest is bullish, but put-heavy volume suggests hedging/concern; similar-pattern stats imply a negative 1-month expectation.
Intellectia signals do not support chasing here: no AI Stock Picker or SwingMax buy trigger today/recently.

Technical Analysis

Trend: Bullish structure (SMA_5 > SMA_20 > SMA_200) and MACD histogram positive and expanding, indicating the uptrend is still intact.
Momentum: RSI_6 at ~86 signals an overbought condition—historically higher probability of pullback/mean reversion.
Levels: Pivot ~7.963; support S1 ~7.555 (then S2 ~7.302). Resistance: R1 ~8.372 (being tested/breached pre-market), then R2 ~8.625.
Tactical read: With price extended above the pivot and pressing resistance while overbought, entries here are “late-cycle” and prone to a sharp dip before any further advance.
Pattern-based expectation: 50% chance of +3.49% next day, but only +0.21% next week and -5.01% next month—skewing against buying at an extended level.

Options Data

Bullish

Open Interest Put-Call Ratio

Bearish

Option Volume Put-Call Ratio

Sentiment split: Very low put/call open-interest ratio (0.1) = positioning is call-heavy (bullish bias), but put/call volume ratio (2.44) = today’s flow is put-dominant (more defensive/hedging tone).
Activity: Today’s volume 31 contracts; open interest ~7,932. Volume vs 30-day average is elevated (14.69x), suggesting a noticeable spike in attention.
Volatility: IV30 ~36.71 vs HV ~31.51 (options pricing in more movement than realized); IV percentile ~37.6 and IV rank ~15 indicate IV is not extreme—no clear “panic” but some premium.

Technical Summary

Sell

Buy

Positive Catalysts

- Debt refinancing/tender offer plan expected to cut long-term financing costs (~55 bps), supporting earnings/cash flow over time.
- Expansion plan: targeting 105–115 new restaurants in 2026 after opening 102 in 2025, reinforcing a growth narrative in Latin America.
- Q3 FY2025 profitability surge (net income and EPS sharply higher YoY) can continue to support sentiment if sustained.

Neutral/Negative Catalysts

- Overbought technical setup at resistance increases near-term pullback risk.
- Margin pressure: gross margin down YoY (11.9%, -4.42% YoY) despite revenue growth—could limit operating leverage.
- Analyst stance is not supportive of a chase: JPM Neutral and slight PT cut, citing lagging momentum in Brazil.
- Expansion requires sizable capex ($275M–$325M projected), which can pressure free cash flow if returns are slower than expected.
- No supportive “smart money” impulse: hedge funds and insiders both described as Neutral; no notable trend.

Financial Performance

Latest quarter: 2025/Q3.
Revenue: $1.193B, +5.22% YoY (steady top-line growth).
Net income: $150.4M, +327.19% YoY (major earnings acceleration).
EPS: $0.71, +317.65% YoY (strong per-share growth).
Profitability quality watch: Gross margin fell to 11.9% (-4.42% YoY), signaling cost pressure even as earnings jumped (likely mix/operating factors to monitor).

Growth

Profitability

Efficiency

Analyst Ratings and Price Target Trends

Recent change: (2025-11-11) JPMorgan lowered PT to $8.70 from $8.80 and maintained Neutral, noting momentum still lagging in Brazil.
Trend: Slightly negative (PT trimmed; rating unchanged at Neutral).
Wall Street pros: improving earnings profile (Q3 surge), refinancing that can lower debt costs, and continued unit growth plan.
Wall Street cons: Brazil momentum concerns, margin compression, and limited implied upside versus current price near the (Neutral) target.

1 Analyst Rating

Wall Street analysts forecast ARCO stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for ARCO is 8.5 USD with a low forecast of 8.5 USD and a high forecast of 8.5 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.

0 Buy

1 Hold

0 Sell

Hold

Current: 8.900

Low

8.5

Averages

8.5

High

8.5

Current: 8.900

Low

8.5

Averages

8.5

High

8.5

JPMorgan

Neutral

downgrade

AI Analysis

2025-11-11

Reason

JPMorgan

Price Target

AI Analysis

2025-11-11

downgrade

Neutral

Reason

JPMorgan lowered the firm's price target on Arcos Dorados to $8.70 from $8.80 and keeps a Neutral rating on the shares as part of a Q3 preview. The firm says the company's momentum is still lagging in Brazil.

Bradesco BBI

Pedro Pinto

Outperform -> Neutral

downgrade

$8.50

2025-11-02

Reason

Bradesco BBI

Pedro Pinto

Price Target

$8.50

2025-11-02

downgrade

Outperform -> Neutral

Reason

Bradesco BBI analyst Pedro Pinto downgraded Arcos Dorados to Neutral from Outperform with an $8.50 price target.

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ARCO Should I Buy

ARCO Should I Buy

Should You Buy Arcos Dorados Holdings Inc (ARCO) Today? Analysis, Price Targets, and 2026 Outlook.

Technical Analysis

Options Data

Technical Summary

Positive Catalysts

Neutral/Negative Catalysts

Financial Performance

Growth

Profitability

Efficiency

Analyst Ratings and Price Target Trends

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