Why Arcos Dorados Holding Inc. Stock Jumped 13% in April, but Fell on Earnings

By Markets Fool.com

What: International McDonald's franchisee Arcos Dorados' stock rose 13% in April, according to S&P Capital IQ data. The stock stayed above $6 per share during the first several trading days of May, but after reporting results May 12, the stock dropped and was trading in the early market hours around $5.60 per share.

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ARCO Chart

ARCO data by YCharts

So what: The April jump wasn't powered by any official news out of Arcos, which operates 2,100 McDonald's restaurants across Latin America and the Caribbean. Instead, the stock simply regained some of the significant ground it has lost lately as the McDonald's brand struggles to reconnect with its customer base. The Golden Arches booked a 1% drop in global comparable-store sales last year as guest traffic fell across every geographic region.

Arcos Dorados' shares haven't been immune to that operating pressure; they're down 30% over the past 52 weeks, despite a 13% jump since the beginning of 2015.

Now what: The company this morning posted first-quarter earnings results that included a 7% organic revenue gain powered by a 9.4% improvement in comparable-store sales. While strong, those figures were lower on both metrics than last year's results. They were also both slightly below Wall Street analysts' expectations. The stock dropped as much as 9.7% after the market opened.

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Still, Arco Dorados' management team believes the company is positioned for solid long-term growth. "While we expect headwinds to persist in the near term, we are confident that our three-year strategic plan will lead to enhanced long term shareholder value," CEO Woods Staton said in a press release accompanying today's earnings results.

The article Why Arcos Dorados Holding Inc. Stock Jumped 13% in April, but Fell on Earnings originally appeared on Fool.com.

Demitrios Kalogeropoulos owns shares of Apple and McDonald's. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Arcos Dorados. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.