A Look At Arcos Dorados Holdings (NYSE:ARCO) Valuation After Fresh 2026 Guidance On Sales And Currency Tailwinds

Guidance sparks fresh look at Arcos Dorados Holdings (ARCO)

Arcos Dorados Holdings (NYSE:ARCO) has put fresh guidance on the table, telling investors it expects sequentially higher comparable sales and US dollar revenue in the first quarter of 2026, supported by stronger local currencies.

See our latest analysis for Arcos Dorados Holdings.

The guidance lands after a strong run in the shares, with the latest price at $8.94 and a 30 day share price return of 14.91%, while the 5 year total shareholder return of 90.20% points to momentum that has built over the longer term.

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With ARCO up 24.86% over 90 days and trading at $8.94, plus guidance pointing to higher comparable sales and US dollar revenue, you have to ask: is this still an underappreciated franchise play, or is future growth already priced in?

Most Popular Narrative: 5.9% Undervalued

With Arcos Dorados last closing at $8.94 versus a most-followed fair value estimate of $9.50, the current price sits slightly below that narrative view, which leans on digital growth, margins and regional demand drivers.

Continued digital adoption, including loyalty program rollouts, app engagement, and digital ordering, are driving higher visit frequency, stronger customer retention, and higher identified sales, which is likely to support future revenue growth and improve gross margins as digital channels scale.

Read the complete narrative. Read the complete narrative.

Curious what kind of revenue climb, margin shape and future earnings multiple it takes to justify that fair value gap? The narrative leans on a specific growth glide path, firmer profitability and a valuation level that still sits below many hospitality peers. If you want to see exactly how those moving parts are stitched together, the full story is where the numbers start to get interesting.

Result: Fair Value of $9.50 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, there are still clear pressure points, with weaker consumer demand in Brazil and higher input costs like beef prices, both of which are capable of challenging that upbeat fair value story.

Find out about the key risks to this Arcos Dorados Holdings narrative.

Another View: Cash Flows Tell a Different Story

The popular narrative pegs fair value at $9.50 and calls Arcos Dorados undervalued, but our DCF model tells a different story, with a future cash flow value of $7.25. That screens as overvalued on cash flows. Which lens do you trust more: story or spreadsheet?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Arcos Dorados Holdings for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 54 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If this mix of optimism and concern feels familiar, do not wait on others to decide for you. Instead, review the balance of 3 key rewards and 3 important warning signs and see how it compares with your own expectations.

Looking for more investment ideas?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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