ARCOS DORADOS HOLDINGS INC-A (ARCO)
VGG0457F1071 - Common Stock
We assign a fundamental rating of 4 out of 10 to ARCO. ARCO was compared to 134 industry peers in the Hotels, Restaurants & Leisure industry. There are concerns on the financial health of ARCO while its profitability can be described as average. ARCO is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year ARCO was profitable.
In the past year ARCO had a positive cash flow from operations.
ARCO had positive earnings in 4 of the past 5 years.
ARCO had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
ARCO's Return On Assets of 4.94% is fine compared to the rest of the industry. ARCO outperforms 67.91% of its industry peers.
The Return On Equity of ARCO (28.53%) is better than 83.58% of its industry peers.
ARCO's Return On Invested Capital of 8.82% is fine compared to the rest of the industry. ARCO outperforms 70.90% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for ARCO is below the industry average of 10.50%.
The 3 year average ROIC (7.73%) for ARCO is below the current ROIC(8.82%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.94% | ||
| ROE | 28.53% | ||
| ROIC | 8.82% |
ROA(3y)4.42%
ROA(5y)1.97%
ROE(3y)33.06%
ROE(5y)8.49%
ROIC(3y)7.73%
ROIC(5y)N/A
1.3 Margins
With a Profit Margin value of 3.25%, ARCO perfoms like the industry average, outperforming 51.49% of the companies in the same industry.
ARCO's Profit Margin has improved in the last couple of years.
ARCO has a Operating Margin of 6.74%. This is comparable to the rest of the industry: ARCO outperforms 43.28% of its industry peers.
ARCO's Operating Margin has improved in the last couple of years.
ARCO has a Gross Margin of 12.93%. This is amonst the worse of the industry: ARCO underperforms 91.79% of its industry peers.
In the last couple of years the Gross Margin of ARCO has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 6.74% | ||
| PM (TTM) | 3.25% | ||
| GM | 12.93% |
OM growth 3YN/A
OM growth 5Y13.12%
PM growth 3YN/A
PM growth 5Y28.5%
GM growth 3Y13.38%
GM growth 5Y12.86%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), ARCO is creating some value.
ARCO has more shares outstanding than it did 1 year ago.
Compared to 5 years ago, ARCO has about the same amount of shares outstanding.
The debt/assets ratio for ARCO has been reduced compared to a year ago.
2.2 Solvency
An Altman-Z score of 2.40 indicates that ARCO is not a great score, but indicates only limited risk for bankruptcy at the moment.
ARCO has a Altman-Z score of 2.40. This is in the better half of the industry: ARCO outperforms 69.40% of its industry peers.
A Debt/Equity ratio of 1.48 is on the high side and indicates that ARCO has dependencies on debt financing.
With a Debt to Equity ratio value of 1.48, ARCO perfoms like the industry average, outperforming 55.97% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.48 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 2.4 |
ROIC/WACC1.16
WACC7.64%
2.3 Liquidity
ARCO has a Current Ratio of 0.63. This is a bad value and indicates that ARCO is not financially healthy enough and could expect problems in meeting its short term obligations.
ARCO's Current ratio of 0.63 is on the low side compared to the rest of the industry. ARCO is outperformed by 66.42% of its industry peers.
A Quick Ratio of 0.57 indicates that ARCO may have some problems paying its short term obligations.
The Quick ratio of ARCO (0.57) is worse than 66.42% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.63 | ||
| Quick Ratio | 0.57 |
3. Growth
3.1 Past
The earnings per share for ARCO have decreased strongly by -17.65% in the last year.
The Earnings Per Share has been growing by 16.81% on average over the past years. This is quite good.
The Revenue has been growing slightly by 7.82% in the past year.
ARCO shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 7.05% yearly.
EPS 1Y (TTM)-17.65%
EPS 3YN/A
EPS 5Y16.81%
EPS Q2Q%-39.29%
Revenue 1Y (TTM)7.82%
Revenue growth 3Y29.73%
Revenue growth 5Y7.05%
Sales Q2Q%0.76%
3.2 Future
ARCO is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 9.64% yearly.
The Revenue is expected to grow by 7.22% on average over the next years.
EPS Next Y-21.14%
EPS Next 2Y-1.15%
EPS Next 3Y4.24%
EPS Next 5Y9.64%
Revenue Next Year4.82%
Revenue Next 2Y6.41%
Revenue Next 3Y7.66%
Revenue Next 5Y7.22%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 10.71 indicates a reasonable valuation of ARCO.
94.03% of the companies in the same industry are more expensive than ARCO, based on the Price/Earnings ratio.
Compared to an average S&P500 Price/Earnings ratio of 27.73, ARCO is valued rather cheaply.
Based on the Price/Forward Earnings ratio of 9.03, the valuation of ARCO can be described as reasonable.
Based on the Price/Forward Earnings ratio, ARCO is valued cheaper than 94.03% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of ARCO to the average of the S&P500 Index (22.83), we can say ARCO is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.71 | ||
| Fwd PE | 9.03 |
4.2 Price Multiples
94.78% of the companies in the same industry are more expensive than ARCO, based on the Enterprise Value to EBITDA ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 4.44 |
4.3 Compensation for Growth
The decent profitability rating of ARCO may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)0.64
EPS Next 2Y-1.15%
EPS Next 3Y4.24%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.10%, ARCO has a reasonable but not impressive dividend return.
ARCO's Dividend Yield is rather good when compared to the industry average which is at 2.82. ARCO pays more dividend than 87.31% of the companies in the same industry.
ARCO's Dividend Yield is a higher than the S&P500 average which is at 2.24.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.1% |
5.2 History
The dividend of ARCO is nicely growing with an annual growth rate of 14.41%!
ARCO has paid a dividend for at least 10 years, which is a reliable track record.
The dividend of ARCO decreased in the last 3 years.
Dividend Growth(5Y)14.41%
Div Incr Years2
Div Non Decr Years2
5.3 Sustainability
31.71% of the earnings are spent on dividend by ARCO. This is a low number and sustainable payout ratio.
The dividend of ARCO is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP31.71%
EPS Next 2Y-1.15%
EPS Next 3Y4.24%
ARCOS DORADOS HOLDINGS INC-A
NYSE:ARCO (12/20/2024, 8:04:00 PM)
After market: 7.4 -0.1 (-1.33%)7.5
+0.18 (+2.46%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryHotels, Restaurants & Leisure
Earnings (Last)
Earnings (Next)
Inst Owners38.68%
Inst Owner Change-6.14%
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap1.58B
Analysts84.62
Price Target13.26 (76.8%)
Short Float %2.04%
Short Ratio3.33
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.1% |
Dividend Growth(5Y)14.41%
DP31.71%
Div Incr Years2
Div Non Decr Years2
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-0.12%
Min EPS beat(2)-4.41%
Max EPS beat(2)4.17%
EPS beat(4)1
Avg EPS beat(4)-9.65%
Min EPS beat(4)-19.26%
Max EPS beat(4)4.17%
EPS beat(8)4
Avg EPS beat(8)2.49%
EPS beat(12)7
Avg EPS beat(12)20.28%
EPS beat(16)N/A
Avg EPS beat(16)N/A
Revenue beat(2)1
Avg Revenue beat(2)1.11%
Min Revenue beat(2)-0.73%
Max Revenue beat(2)2.96%
Revenue beat(4)3
Avg Revenue beat(4)1.58%
Min Revenue beat(4)-0.73%
Max Revenue beat(4)3.88%
Revenue beat(8)6
Avg Revenue beat(8)0.87%
Revenue beat(12)9
Avg Revenue beat(12)1.74%
Revenue beat(16)13
Avg Revenue beat(16)2.28%
PT rev (1m)-1.27%
PT rev (3m)-1.89%
EPS NQ rev (1m)-28%
EPS NQ rev (3m)-28%
EPS NY rev (1m)0%
EPS NY rev (3m)-8.18%
Revenue NQ rev (1m)-7.49%
Revenue NQ rev (3m)-7.49%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-0.46%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.71 | ||
| Fwd PE | 9.03 | ||
| P/S | 0.35 | ||
| P/FCF | N/A | ||
| P/OCF | 5.11 | ||
| P/B | 3.08 | ||
| P/tB | 3.56 | ||
| EV/EBITDA | 4.44 |
EPS(TTM)0.7
EY9.33%
EPS(NY)0.83
Fwd EY11.07%
FCF(TTM)-0.29
FCFYN/A
OCF(TTM)1.47
OCFY19.59%
SpS21.37
BVpS2.43
TBVpS2.11
PEG (NY)N/A
PEG (5Y)0.64
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.94% | ||
| ROE | 28.53% | ||
| ROCE | 14.06% | ||
| ROIC | 8.82% | ||
| ROICexc | 9.34% | ||
| ROICexgc | 9.65% | ||
| OM | 6.74% | ||
| PM (TTM) | 3.25% | ||
| GM | 12.93% | ||
| FCFM | N/A |
ROA(3y)4.42%
ROA(5y)1.97%
ROE(3y)33.06%
ROE(5y)8.49%
ROIC(3y)7.73%
ROIC(5y)N/A
ROICexc(3y)9.01%
ROICexc(5y)N/A
ROICexgc(3y)9.32%
ROICexgc(5y)N/A
ROCE(3y)12.16%
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5Y3.13%
ROICexc growth 3YN/A
ROICexc growth 5Y3.35%
OM growth 3YN/A
OM growth 5Y13.12%
PM growth 3YN/A
PM growth 5Y28.5%
GM growth 3Y13.38%
GM growth 5Y12.86%
F-Score5
Asset Turnover1.52
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.48 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | 1.57 | ||
| Cap/Depr | 209.66% | ||
| Cap/Sales | 8.25% | ||
| Interest Coverage | 5.96 | ||
| Cash Conversion | 64.4% | ||
| Profit Quality | N/A | ||
| Current Ratio | 0.63 | ||
| Quick Ratio | 0.57 | ||
| Altman-Z | 2.4 |
F-Score5
WACC7.64%
ROIC/WACC1.16
Cap/Depr(3y)172.66%
Cap/Depr(5y)160.25%
Cap/Sales(3y)6.21%
Cap/Sales(5y)6.39%
Profit Quality(3y)139.26%
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-17.65%
EPS 3YN/A
EPS 5Y16.81%
EPS Q2Q%-39.29%
EPS Next Y-21.14%
EPS Next 2Y-1.15%
EPS Next 3Y4.24%
EPS Next 5Y9.64%
Revenue 1Y (TTM)7.82%
Revenue growth 3Y29.73%
Revenue growth 5Y7.05%
Sales Q2Q%0.76%
Revenue Next Year4.82%
Revenue Next 2Y6.41%
Revenue Next 3Y7.66%
Revenue Next 5Y7.22%
EBIT growth 1Y-3.32%
EBIT growth 3YN/A
EBIT growth 5Y21.09%
EBIT Next Year53.16%
EBIT Next 3Y23.81%
EBIT Next 5Y23.11%
FCF growth 1Y-132.82%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y-12.78%
OCF growth 3Y187.94%
OCF growth 5Y16.28%