What Happened?
Shares of fast-food chain Arcos Dorados (NYSE: ARCO) fell 2.3% in the afternoon session after the Trump administration's announcement of new global tariffs, reignited trade policy uncertainty.
The move came swiftly after the Supreme Court ruled the previous week that the president could not use the International Emergency Economic Powers Act (IEEPA) for such duties, a decision that had initially sent markets higher. However, the administration invoked a different authority, the Trade Act of 1974, to impose a 15% global tariff for up to 150 days. The rapid reimposition of trade barriers creates significant uncertainty for companies across multiple sectors that depend on international supply chains and global trade. Investors are now weighing the potential impact of these new duties on corporate earnings and broader economic activity.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Arcos Dorados? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Arcos Dorados’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock gained 7.4% on the news that the company reported mixed second-quarter results that saw profits beat expectations but revenue fall short. The master franchisee for McDonald's in Latin America and the Caribbean posted earnings of $0.11 per share, easily surpassing analyst estimates of $0.08. However, total revenue of $1.14 billion missed Wall Street's expectations, growing just 2.8% year-over-year. While same-store sales, which track performance at restaurants open for at least a year, grew a solid 12.1%, this represented a significant slowdown from previous periods. The company's operating margin also declined to 5.5% from 6.7% in the same quarter last year. Investors appeared to weigh the strong profit beat against the revenue miss and decelerating growth, leading to a muted reaction for the stock.
Arcos Dorados is up 19.7% since the beginning of the year, and at $8.73 per share, it is trading close to its 52-week high of $8.94 from February 2026. Investors who bought $1,000 worth of Arcos Dorados’s shares 5 years ago would now be looking at an investment worth $1,609.
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