NYSE:ARCO

Stock Analysis Report

Executive Summary

Arcos Dorados Holdings Inc. operates as a franchisee of McDonald’s restaurants.

Snowflake

Fundamentals

Moderate growth potential second-rate dividend payer.


Similar Companies

Share Price & News

How has Arcos Dorados Holdings's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: ARCO has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-0.5%

ARCO

0.4%

US Hospitality

0.5%

US Market


1 Year Return

1.3%

ARCO

14.7%

US Hospitality

16.1%

US Market

Return vs Industry: ARCO underperformed the US Hospitality industry which returned 14.7% over the past year.

Return vs Market: ARCO underperformed the US Market which returned 16.1% over the past year.


Shareholder returns

ARCOIndustryMarket
7 Day-0.5%0.4%0.5%
30 Day0.1%3.0%3.9%
90 Day9.7%5.1%6.6%
1 Year2.4%1.3%17.5%14.7%18.7%16.1%
3 Year39.3%35.9%36.7%27.4%47.2%37.7%
5 Year23.8%19.4%36.3%22.0%61.5%43.7%

Price Volatility Vs. Market

How volatile is Arcos Dorados Holdings's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Arcos Dorados Holdings undervalued compared to its fair value and its price relative to the market?

27.97x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: ARCO ($7.68) is trading above our estimate of fair value ($3.67)

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


Price To Earnings Ratio

PE vs Industry: ARCO is poor value based on its PE Ratio (28x) compared to the Hospitality industry average (22.1x).

PE vs Market: ARCO is poor value based on its PE Ratio (28x) compared to the US market (18x).


Price to Earnings Growth Ratio

PEG Ratio: ARCO is poor value based on its PEG Ratio (1.3x)


Price to Book Ratio

PB vs Industry: ARCO is overvalued based on its PB Ratio (4.2x) compared to the US Hospitality industry average (2.2x).


Next Steps

Future Growth

How is Arcos Dorados Holdings forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

22.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ARCO's forecast earnings growth (22.3% per year) is above the savings rate (2.7%).

Earnings vs Market: ARCO's earnings (22.3% per year) are forecast to grow faster than the US market (14.3% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: ARCO's revenue (5.7% per year) is forecast to grow slower than the US market (7.3% per year).

High Growth Revenue: ARCO's revenue (5.7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: ARCO's Return on Equity is forecast to be low in 3 years time (18.3%).


Next Steps

Past Performance

How has Arcos Dorados Holdings performed over the past 5 years?

51.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: ARCO has high quality earnings.

Growing Profit Margin: ARCO's current net profit margins (1.9%) are lower than last year (3%).


Past Earnings Growth Analysis

Earnings Trend: ARCO has become profitable over the past 5 years, growing earnings by 51.8% per year.

Accelerating Growth: ARCO's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: ARCO had negative earnings growth (-42%) over the past year, making it difficult to compare to the Hospitality industry average (-16.4%).


Return on Equity

High ROE: ARCO's Return on Equity (15.1%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Arcos Dorados Holdings's financial position?


Financial Position Analysis

Short Term Liabilities: ARCO's short term assets ($360.0M) do not cover its short term liabilities ($495.2M)

Long Term Liabilities: ARCO's short term assets ($360.0M) do not cover its long term liabilities (1.4B)


Debt to Equity History and Analysis

Debt Level: ARCO's debt to equity ratio (170.7%) is considered high.

Reducing Debt: ARCO's debt to equity ratio has reduced from 188.1% to 170.7% over the past 5 years.

Debt Coverage: ARCO's debt is well covered by operating cash flow (36.5%).

Interest Coverage: ARCO's interest payments on its debt are not well covered by EBIT (2.9x coverage).


Balance Sheet

Inventory Level: ARCO has a high level of physical assets or inventory.

Debt Coverage by Assets: ARCO's debt is not covered by short term assets (assets are 0.6x debt).


Next Steps

Dividend

What is Arcos Dorados Holdings's current dividend yield, its reliability and sustainability?

1.43%

Current Dividend Yield


Upcoming Dividend Payment

Purchase Arcos Dorados Holdings before the 'Buy Limit' to receive their next dividend payment.


Dividend Yield vs Market

company1.4%marketbottom25%1.4%markettop25%3.7%industryaverage2.9%forecastin3Years1.6%

Current dividend yield vs market & industry

Notable Dividend: ARCO's dividend (1.43%) is higher than the bottom 25% of dividend payers in the US market (1.43%).

High Dividend: ARCO's dividend (1.43%) is low compared to the top 25% of dividend payers in the US market (3.65%).


Stability and Growth of Payments

Stable Dividend: ARCO has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: ARCO has only been paying a dividend for 9 years, and since then payments have fallen.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (40.1%), ARCO's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: ARCO's dividends in 3 years are forecast to be well covered by earnings (25.2% payout ratio).


Next Steps

Management

What is the CEO of Arcos Dorados Holdings's salary, the management and board of directors tenure and is there insider trading?

2.8yrs

Average management tenure


CEO

Marcelo Rabach (49yo)

0.3yrs

Tenure

0

Mr. Marcelo Rabach serves as Chief Executive Officer at Arcos Dorados Holdings, Inc. since July 1, 2019. He served as Chief Operating Officer of Arcos Dorados Holdings, Inc. since August 2015 until July 1, ...


Management Age and Tenure

2.8yrs

Average Tenure

50yo

Average Age

Experienced Management: ARCO's management team is considered experienced (2.8 years average tenure).


Board Age and Tenure

8.5yrs

Average Tenure

57yo

Average Age

Experienced Board: ARCO's board of directors are considered experienced (8.5 years average tenure).


Insider Trading

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


Recent Insider Transactions

SellUS$14,236,72917 Sep 19
Chablais Investments S.A.
EntityCompany
Shares2,123,816
Max PriceUS$6.73

Ownership Breakdown

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


Management Team

  • Woods Staton (69yo)

    Executive Chairman

    • Tenure: 12.8yrs
  • Juan David Bastidas Saldarriaga (51yo)

    Chief Legal Counsel

    • Tenure: 9.3yrs
  • Marcelo Rabach (49yo)

    Chief Executive Officer

    • Tenure: 0.3yrs
  • Alejandro Yapur (50yo)

    Divisional President of SLAD

    • Tenure: 6.3yrs
  • Luis Raganato (54yo)

    Chief Operating Officer

    • Tenure: 0.3yrs
  • Diego Benenzon (52yo)

    Vice President for Human Resources

    • Tenure: 5.8yrs
  • Paulo Camargo (50yo)

    Divisional President of Brazil

    • Tenure: 4.1yrs
  • Mariano Tannenbaum (45yo)

    Chief Financial Officer

    • Tenure: 2.8yrs
  • Santiago Blanco (49yo)

    Chief Marketing and Digital Officer

    • Tenure: 0.8yrs
  • David Grinberg (40yo)

    Vice President of Corporate Communications & Investor Relations

    • Tenure: 1.8yrs

Board Members

  • Annette Franqui (57yo)

    Director

    • Tenure: 12.8yrs
  • José Alberto Vélez Cadavid (69yo)

    Independent Director

    • Tenure: 8.4yrs
  • Michael Chu (71yo)

    Independent Director

    • Tenure: 8.6yrs
  • Woods Staton (69yo)

    Executive Chairman

    • Tenure: 12.8yrs
  • Carlos Hernández-Artigas (55yo)

    Director

    • Tenure: 12.8yrs
  • Jorge Ricardo Gutiérrez Muñoz (75yo)

    Independent Director

    • Tenure: 3.3yrs
  • Sergio Daniel Alonso (56yo)

    Director

    • Tenure: 0yrs
  • José Raul Fernández (57yo)

    Independent Director

    • Tenure: 6.1yrs
  • Cristina Palmaka

    Independent Director

    • Tenure: 0yrs
  • Francisco Staton (38yo)

    Director

    • Tenure: 1.6yrs

Company Information

Arcos Dorados Holdings Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Arcos Dorados Holdings Inc.
  • Ticker: ARCO
  • Exchange: NYSE
  • Founded: 2007
  • Industry: Restaurants
  • Sector: Consumer Services
  • Market Cap: US$1.567b
  • Shares outstanding: 204.07m
  • Website: https://www.arcosdorados.com

Number of Employees


Location

  • Arcos Dorados Holdings Inc.
  • Dr. Luis Bonavita 1294
  • Office 501
  • Montevideo
  • 11300
  • Uruguay

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
ARCONYSE (New York Stock Exchange)YesClass A SharesUSUSDApr 2011
AD8DB (Deutsche Boerse AG)YesClass A SharesDEEURApr 2011
ARCO NBMV (Bolsa Mexicana de Valores)YesClass A SharesMXMXNApr 2011
ARCOBASE (Buenos Aires Stock Exchange)CEDEAR EACH 1 REP 2 COM CL 'A' USD0.00ARARSApr 2019

Biography

Arcos Dorados Holdings Inc. operates as a franchisee of McDonald’s restaurants. It has the exclusive right to own, operate, and grant franchises of McDonald’s restaurants in 20 countries and territories in ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/11/20 00:26
End of Day Share Price2019/11/19 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.