This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Will McDonald's McUSA World Cup Burger Boost Arcos Dorados Stock?

NEW YORK (TheStreet) -- The world's largest franchisee of McDonald's (MCD - Get Report) restaurants, Arcos Dorados (ARCO), could be getting over its struggles at the perfect time. Arcos Dorados went public in 2011, but has seen its shares fall 51% since its IPO. The stock closed Thursday at $10.50, down 13.4% year to date.

There's hope, though. The start of the 2014 World Cup and several themed event promotions could help lift sales and the company's share price. Arcos is one of many public companies hoping to cash in on the World Cup.

Arcos has launched a new World Cup promotion featuring sandwiches themed after a participating team for every day of the week. Only seven of the 32 participating teams are featured in the promotion, but they are among the world's most beloved and followed teams

At over 800 McDonald's locations in Brazil, fans can get a McArgentina, McUSA, McBrazil, McSpain, McGermany, McFrance or McItaly. Only one sandwich is available each day, with Argentina (Friday), USA (Saturday) and Brazil (Sunday) featured on the weekends. The promotion runs through June 25.

The majority of the sandwiches contain Angus beef, but several shift towards their respective country's tastes. Spain and France are chicken burgers. The McItaly has polpettone meat on it -- a kind of meat loaf. Germany's featured burger contains rib meat.

Currently the McArgentine -- which features chimichurri, mayo, lettuce, tomato, bacon, and cheddar cheese -- is the most sold of the promoted burgers. The McUSA, containing bbq sauce, crispy onions, pickles, lettuce, bacon, and cheddar cheese, is in second place.

This promotion is extremely important to Arcos Dorados, as it will boost visits and same-store sales growth for its most important Brazil region. In the first quarter, organic growth was 9.9% in Brazil. Same-store sales grew 3.4% and the company opened 81 stores in the last 12 months. In 2013, the Brazil region saw sales of $1.8 billion, an increase of 13.3% based on constant currency. This represented 44% of the company's total annual revenue.

While Brazil's revenue is increasing thanks to same store sales growth and additional locations, the company has seen earnings slide. High inflation and commodity costs are hurting Arcos in Brazil and several other regions. Promotions like Monopoly and Champions Glasses helped boost sales. The strength of the World Cup sandwich campaign will post further gains for the company.

Arcos has locations in 20 countries and is the exclusive franchisee in the territories it operates. It is also able to sub-franchise out to others. At the end of the first quarter, there were 2,059 McDonald's open under Arcos Dorados' management. The company also signed earlier this year to open 250 more restaurants from 2014 to 2016.

Analysts see Arcos posting declining revenue to $3.9 billion in fiscal 2014. That number seems hard to believe with the possible inflow from the World Cup and new promotions. Earnings per share are expected to hit 37 cents this fiscal year and 46 cents in the next fiscal year.

Shares of Arcos have rebounded recently, with shares up 20% in the last month. This comes after falling almost 23% in the last 52 weeks, and seeing shares fall more than 50% from its IPO price. The 2014 World Cup has seen record demand for tickets. Over 600,000 people are expected to come to the tournament and spend more than $3 billion.

Arcos Dorados will be a big winner at the 2014 World Cup and has the 2016 Summer Olympics to look forward to as well.

At the time of publication, the author held no positions in any of the stocks mentioned.

If Pandora Really Cared About Musicians ...

Lululemon Shares Tumble on Lower Outlook

Kass: Turn, Turn, Turn

Medtronic Is Great but Its Stock Is Too Expensive for Now

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
MCD $126.49 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs