ARKO Corp. (ARKO) Is a Trending Stock: Facts to Know Before Betting on It

ARKO Corp. (ARKO) has been trending on Zacks.com, with shares returning -14% over the past month, underperforming the S&P 500 and its industry. Current consensus estimates project a 9.1% increase in earnings per share for the current quarter but a 38.5% decrease for the current fiscal year, followed by a 25% increase in the next fiscal year; revenue is expected to decline 12.8% for the current quarter and 8.7% for the current fiscal year. Despite these mixed projections, ARKO receives a Zacks Value Style Score of A, suggesting it's currently undervalued relative to its peers, and a Zacks Rank #3, indicating it may perform in line with the market in the near term.

Analysis

ARKO Corp. (ARKO) has recently garnered significant investor attention despite its shares declining 14% over the past month, starkly underperforming both the Zacks S&P 500 composite's +0.6% gain and its own Zacks Consumer Products - Staples industry's 3.1% loss. Current earnings projections present a mixed outlook: a 9.1% year-over-year increase to $0.12 per share is anticipated for the current quarter, yet the consensus estimate for the current fiscal year points to a significant 38.5% decline to $0.08 per share. However, a rebound is forecasted for the next fiscal year, with earnings expected to grow by 25% to $0.10 per share. Notably, these consensus estimates have remained unchanged over the last 30 days. Revenue forecasts are less optimistic, with an expected 12.8% year-over-year decline to $2.08 billion for the current quarter, an 8.7% drop for the current fiscal year to $7.97 billion, and flat revenue projected for the next fiscal year. In its last reported quarter, ARKO's revenues fell 11.8% year-over-year to $1.83 billion, though this slightly surpassed consensus by 1.06%, while EPS of -$0.12, compared to -$0.02 a year ago, represented a +29.41% surprise. The company has a spotty record of surpassing EPS and revenue estimates, doing so only once in the last four quarters for each metric. Despite these challenges, ARKO holds a Zacks Rank #3 (Hold), suggesting it may perform in line with the broader market, and boasts a Zacks Value Style Score of A, indicating it is currently trading at a discount relative to its peers.

Key Decisions for Investors

• Investors should acknowledge ARKO's recent substantial share price underperformance and the conflicting earnings outlook, which includes a projected 38.5% decline in current fiscal year EPS but an anticipated 9.1% rise in current quarter EPS and a 25% increase next fiscal year.
• The stock's 'A' grade for value suggests a potential discount relative to peers, which might present an opportunity if revenue declines (projected -12.8% for current quarter, -8.7% for current fiscal year) can be arrested and reversed.
• Given the Zacks Rank #3 (Hold) and unchanged earnings estimates over the past month, a neutral stance or holding existing positions may be prudent while closely monitoring upcoming earnings reports, revenue trends, and any revisions to analyst estimates for clearer indications of a turnaround, especially considering its inconsistent history of meeting consensus expectations.