NasdaqGS:ARCE

Stock Analysis Report

Executive Summary

Arco Platform Limited, a technology company in the education sector, provides a pedagogical system with technology-enabled features to deliver educational content to private schools in Brazil.


Snowflake Analysis

Excellent balance sheet with reasonable growth potential.

Share Price & News

How has Arco Platform's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: ARCE's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

6.4%

ARCE

1.7%

US Consumer Services

0.5%

US Market


1 Year Return

111.1%

ARCE

34.2%

US Consumer Services

20.3%

US Market

Return vs Industry: ARCE exceeded the US Consumer Services industry which returned 34.2% over the past year.

Return vs Market: ARCE exceeded the US Market which returned 20.3% over the past year.


Shareholder returns

ARCEIndustryMarket
7 Day6.4%1.7%0.5%
30 Day11.3%5.8%2.0%
90 Day31.8%21.0%9.4%
1 Year111.1%111.1%34.5%34.2%22.8%20.3%
3 Yearn/a124.1%113.6%50.1%40.4%
5 Yearn/a198.1%164.0%73.1%54.1%

Price Volatility Vs. Market

How volatile is Arco Platform's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Arco Platform undervalued compared to its fair value and its price relative to the market?

12.37x

Price to Book (PB) ratio


Share Price vs. Fair Value

Below Fair Value: ARCE ($56.55) is trading above our estimate of fair value ($16.83)

Significantly Below Fair Value: ARCE is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: ARCE is unprofitable, so we can't compare its PE Ratio to the Consumer Services industry average.

PE vs Market: ARCE is unprofitable, so we can't compare its PE Ratio to the US market.


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate ARCE's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: ARCE is overvalued based on its PB Ratio (12.4x) compared to the US Consumer Services industry average (2.2x).


Next Steps

Future Growth

How is Arco Platform forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

67.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ARCE is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (1.7%).

Earnings vs Market: ARCE is forecast to become profitable over the next 3 years, which is considered above average market growth.

High Growth Earnings: ARCE's is expected to become profitable in the next 3 years.

Revenue vs Market: ARCE's revenue (17.9% per year) is forecast to grow faster than the US market (7.6% per year).

High Growth Revenue: ARCE's revenue (17.9% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: ARCE's Return on Equity is forecast to be low in 3 years time (17.6%).


Next Steps

Past Performance

How has Arco Platform performed over the past 5 years?

-73.6%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: ARCE is currently unprofitable.

Growing Profit Margin: ARCE is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: ARCE is unprofitable, and losses have increased over the past 5 years at a rate of -73.6% per year.

Accelerating Growth: Unable to compare ARCE's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: ARCE is unprofitable, making it difficult to compare its past year earnings growth to the Consumer Services industry (14.8%).


Return on Equity

High ROE: ARCE has a negative Return on Equity (-12.55%), as it is currently unprofitable.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Arco Platform's financial position?


Financial Position Analysis

Short Term Liabilities: ARCE's short term assets (R$1.1B) exceed its short term liabilities (R$249.9M).

Long Term Liabilities: ARCE's short term assets (R$1.1B) exceed its long term liabilities (R$255.3M).


Debt to Equity History and Analysis

Debt Level: ARCE's debt to equity ratio (0.05%) is considered satisfactory.

Reducing Debt: Insufficient data to determine if ARCE's debt to equity ratio has reduced over the past 5 years.


Balance Sheet

Inventory Level: ARCE has a low level of unsold assets or inventory.

Debt Coverage by Assets: ARCE's debt is covered by short term assets (assets are 2061x debt).


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: Whilst unprofitable ARCE has sufficient cash runway for more than 3 years if it maintains its current positive free cash flow level.

Forecast Cash Runway: ARCE is unprofitable but has sufficient cash runway for more than 3 years, due to free cash flow being positive and growing by 25.2% per year.


Next Steps

Dividend

What is Arco Platform's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

Notable Dividend: Unable to evaluate ARCE's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate ARCE's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if ARCE's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if ARCE's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of ARCE's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

5.9yrs

Average management tenure


CEO

Ari De Sá Cavalcante Neto (39yo)

2yrs

Tenure

Mr. Ari De Sá Cavalcante Neto is Founder of Arco Platform Limited and serves as its Chief Executive Officer and Director since February 2018. Mr. De Sá Cavalcante Neto has been a member of the advisory com ...


Leadership Team

NamePositionTenureCompensationOwnership
Ari De Sá Cavalcante Neto
Founder2yrsno data15.12% R$469.2m
David Dos Santos
CFO & VP of Business Development5.9yrsno datano data
João Silva
Chief Operation Officer6.1yrsno datano data
Vitor Hiraiwa
Head of Investor Relations0yrsno datano data
Roberto Otero
FP&A and Investor Relations Director0yrsno datano data

5.9yrs

Average Tenure

32yo

Average Age

Experienced Management: ARCE's management team is seasoned and experienced (5.9 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Ari De Sá Cavalcante Neto
Founder2yrsno data15.12% R$469.2m
Alberto Menache
Independent Director1.5yrsno datano data
Martin Escobari
Independent Director1.5yrsno datano data
Edward Ruiz
Independent Director0.6yrsno datano data
Oto De Sá Cavalcante
Chairman of the Board2yrsno data35.04% R$1.1b
Pablo Doberti
Independent Director0.5yrsno datano data

1.5yrs

Average Tenure

47yo

Average Age

Experienced Board: ARCE's board of directors are not considered experienced ( 1.5 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Arco Platform Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Arco Platform Limited
  • Ticker: ARCE
  • Exchange: NasdaqGS
  • Founded: 2004
  • Industry: Education Services
  • Sector: Consumer Services
  • Market Cap: US$3.103b
  • Shares outstanding: 54.87m
  • Website: https://www.arcoeducacao.com.br

Number of Employees


Location

  • Arco Platform Limited
  • Rua Elvira Ferraz 250
  • Sala 716
  • Sao Paulo
  • São Paulo
  • 04552-040
  • Brazil

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
ARCENasdaqGS (Nasdaq Global Select)YesClass A Common SharesUSUSDSep 2018

Biography

Arco Platform Limited, a technology company in the education sector, provides a pedagogical system with technology-enabled features to deliver educational content to private schools in Brazil. The company’s curriculum solutions provide educational content from basic to secondary education K-12 curriculum in printed and digital formats delivered through its platform. As of March 31, 2019, it had a network consisted of 1,462 partner schools and 498,553 enrolled students. The company’s activities also comprise editing, publishing, advertising, and sale of educational content for private schools. It serves students, teachers, administrators, and parents. The company was founded in 2004 and is based in Sao Paulo, Brazil. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/20 03:05
End of Day Share Price2020/02/19 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.