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

Fundamentals

Excellent balance sheet with high 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


Market Performance


7 Day Return

-8.1%

ARCE

0.8%

US Consumer Services

1.8%

US Market


1 Year Return

93.4%

ARCE

24.4%

US Consumer Services

7.3%

US Market

Return vs Industry: ARCE exceeded the US Consumer Services industry which returned 24.4% over the past year.

Return vs Market: ARCE exceeded the US Market which returned 7.3% over the past year.


Shareholder returns

ARCEIndustryMarket
7 Day-8.1%0.8%1.8%
30 Day-5.4%-1.0%-0.7%
90 Day-1.1%-0.6%0.06%
1 Year93.4%93.4%25.0%24.4%9.7%7.3%
3 Yearn/a113.2%101.3%46.3%36.9%
5 Yearn/a142.6%117.5%64.5%46.5%

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?

3.9%

Undervalued compared to fair value


Share Price vs. Fair Value

Undervalued: ARCE ($43.99) is trading below our estimate of fair value ($45.77)

Significantly Undervalued: ARCE is trading below fair value, but not by a significant amount.


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

Low 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 (8.4x) 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?

44.8%

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 (2.7%).

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

High Growth Earnings: ARCE's loss is forecast to worsen by 0% next year.

Revenue vs Market: ARCE's revenue (24% per year) is forecast to grow faster than the US market (7.3% per year).

High Growth Revenue: ARCE's revenue (24% per year) is forecast to grow faster than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

High Future ROE: ARCE's Return on Equity is forecast to be low in 3 years time (17%).


Next Steps

Past Performance

How has Arco Platform performed over the past 5 years?

-68.9%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: ARCE is unprofitable, and losses have increased over the past 5 years at a rate of -68.9% 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 (5.5%).


Return on Equity

High ROE: ARCE has a negative Return on Equity (-7.22%), as it is currently unprofitable.


Return on Assets

ROA vs Industry: ARCE is currently unprofitable, so its Return on Assets is negative.


Return on Capital Employed

ROCE Improving: ARCE is currently unprofitable, so its Return on Capital Employed is negative.


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) exceeds its short term liabilities (R$205.9M)

Long Term Liabilities: ARCE's short term assets (1.1B) exceeds its long term liabilities (177.4M)


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 1990.204840x 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 21.5% per year.


Next Steps

Dividend

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


Dividend Yield vs Market

companyn/amarketbottom25%1.5%markettop25%3.7%industryaverage2.0%forecastin3Years0%

Current dividend yield vs market & industry


Stability and Growth of Payments

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.

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

What is the CEO of Arco Platform's salary, the management and board of directors tenure and is there insider trading?

5.6yrs

Average management tenure


CEO

Ari De Sá Cavalcante Neto (39yo)

1.7yrs

Tenure

0

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 ...


Management Age and Tenure

5.6yrs

Average Tenure

32yo

Average Age

Experienced Management: ARCE's management team is seasoned and experienced (5.6 years average tenure).


Board Age and Tenure

1.2yrs

Average Tenure

47yo

Average Age

Experienced Board: ARCE's board of directors are not considered experienced ( 1.2 years average tenure), which suggests a new board.


Insider Trading

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


Ownership Breakdown


Management Team

  • Ari De Sá Cavalcante Neto (39yo)

    Founder

    • Tenure: 1.7yrs
  • David Dos Santos (31yo)

    CFO & VP of Business Development

    • Tenure: 5.6yrs
  • João Silva (32yo)

    Chief Operation Officer

    • Tenure: 5.8yrs
  • Vitor Hiraiwa

    Head of Investor Relations

    • Tenure: 0yrs

Board Members

  • Alberto Menache (46yo)

    Independent Director

    • Tenure: 1.2yrs
  • Martin Escobari (47yo)

    Independent Director

    • Tenure: 1.2yrs
  • Edward Ruiz (69yo)

    Independent Director

    • Tenure: 0.3yrs
  • Ari De Sá Cavalcante Neto (39yo)

    Founder

    • Tenure: 1.7yrs
  • Oto De Sá Cavalcante (72yo)

    Chairman of the Board

    • Tenure: 1.7yrs
  • Pablo Doberti

    Independent Director

    • Tenure: 0.2yrs

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$2.259b
  • Shares outstanding: 51.35m
  • 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’ ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/18 01:15
End of Day Share Price2019/10/17 00:00
Earnings2019/06/30
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.