ARCOS DORADOS HOLDINGS INC-A (ARCO) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:ARCO - VGG0457F1071 - Common Stock
7.785 USD
-0.09 (-1.21%)
Taking everything into account, ARCO scores 4 out of 10 in our fundamental rating. ARCO was compared to 133 industry peers in the Hotels, Restaurants & Leisure industry. While ARCO is still in line with the averages on profitability rating, there are concerns on its financial health. ARCO has a correct valuation and a medium growth rate. Finally ARCO also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
- ARCO had positive earnings in the past year.
- 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
- The Return On Assets of ARCO (6.88%) is better than 75.94% of its industry peers.
- Looking at the Return On Equity, with a value of 32.94%, ARCO belongs to the top of the industry, outperforming 84.21% of the companies in the same industry.
- ARCO has a Return On Invested Capital of 7.78%. This is in the better half of the industry: ARCO outperforms 63.91% of its industry peers.
- The Average Return On Invested Capital over the past 3 years for ARCO is in line with the industry average of 10.34%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.88% | ||
| ROE | 32.94% | ||
| ROIC | 7.78% |
ROA(3y)5.49%
ROA(5y)2.38%
ROE(3y)35.94%
ROE(5y)10.55%
ROIC(3y)8.93%
ROIC(5y)N/A
1.3 Margins
- With a Profit Margin value of 5.39%, ARCO perfoms like the industry average, outperforming 59.40% of the companies in the same industry.
- In the last couple of years the Profit Margin of ARCO has grown nicely.
- ARCO has a Operating Margin (7.85%) which is in line with its industry peers.
- ARCO's Operating Margin has improved in the last couple of years.
- ARCO has a Gross Margin of 12.39%. This is amonst the worse of the industry: ARCO underperforms 88.72% of its industry peers.
- ARCO's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 7.85% | ||
| PM (TTM) | 5.39% | ||
| GM | 12.39% |
OM growth 3Y13.39%
OM growth 5Y5.96%
PM growth 3Y24.84%
PM growth 5Y4.27%
GM growth 3Y1.69%
GM growth 5Y14.64%
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.
- The number of shares outstanding for ARCO remains at a similar level compared to 1 year ago.
- The number of shares outstanding for ARCO has been increased compared to 5 years ago.
- Compared to 1 year ago, ARCO has a worse debt to assets ratio.
2.2 Solvency
- ARCO has an Altman-Z score of 2.25. This is not the best score and indicates that ARCO is in the grey zone with still only limited risk for bankruptcy at the moment.
- The Altman-Z score of ARCO (2.25) is better than 62.41% of its industry peers.
- The Debt to FCF ratio of ARCO is 383.76, which is on the high side as it means it would take ARCO, 383.76 years of fcf income to pay off all of its debts.
- ARCO has a worse Debt to FCF ratio (383.76) than 61.65% of its industry peers.
- A Debt/Equity ratio of 1.32 is on the high side and indicates that ARCO has dependencies on debt financing.
- ARCO has a Debt to Equity ratio of 1.32. This is comparable to the rest of the industry: ARCO outperforms 56.39% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.32 | ||
| Debt/FCF | 383.76 | ||
| Altman-Z | 2.25 |
ROIC/WACC1.01
WACC7.71%
2.3 Liquidity
- A Current Ratio of 0.89 indicates that ARCO may have some problems paying its short term obligations.
- ARCO has a Current ratio (0.89) which is in line with its industry peers.
- ARCO has a Quick Ratio of 0.89. This is a bad value and indicates that ARCO is not financially healthy enough and could expect problems in meeting its short term obligations.
- Looking at the Quick ratio, with a value of 0.81, ARCO is in line with its industry, outperforming 46.62% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.89 | ||
| Quick Ratio | 0.81 |
3. Growth
3.1 Past
- ARCO shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -18.57%.
- Measured over the past years, ARCO shows a quite strong growth in Earnings Per Share. The EPS has been growing by 11.38% on average per year.
- ARCO shows a small growth in Revenue. In the last year, the Revenue has grown by 1.21%.
- Measured over the past years, ARCO shows a quite strong growth in Revenue. The Revenue has been growing by 8.60% on average per year.
EPS 1Y (TTM)-18.57%
EPS 3Y45.99%
EPS 5Y11.38%
EPS Q2Q%-29.41%
Revenue 1Y (TTM)1.21%
Revenue growth 3Y18.89%
Revenue growth 5Y8.6%
Sales Q2Q%5.22%
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 9.48% yearly.
- ARCO is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 6.20% yearly.
EPS Next Y-17.55%
EPS Next 2Y-1.44%
EPS Next 3Y6.05%
EPS Next 5Y9.48%
Revenue Next Year3.64%
Revenue Next 2Y5.49%
Revenue Next 3Y5.95%
Revenue Next 5Y6.2%
3.3 Evolution
- The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
- Based on the Price/Earnings ratio of 13.66, the valuation of ARCO can be described as correct.
- 83.46% of the companies in the same industry are more expensive than ARCO, based on the Price/Earnings ratio.
- When comparing the Price/Earnings ratio of ARCO to the average of the S&P500 Index (27.30), we can say ARCO is valued slightly cheaper.
- With a Price/Forward Earnings ratio of 11.13, the valuation of ARCO can be described as very reasonable.
- 85.71% of the companies in the same industry are more expensive than ARCO, based on the Price/Forward Earnings ratio.
- When comparing the Price/Forward Earnings ratio of ARCO to the average of the S&P500 Index (24.32), we can say ARCO is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.66 | ||
| Fwd PE | 11.13 |
4.2 Price Multiples
- ARCO's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. ARCO is cheaper than 95.49% of the companies in the same industry.
- Based on the Price/Free Cash Flow ratio, ARCO is valued a bit more expensive than 61.65% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 634.91 | ||
| EV/EBITDA | 4.25 |
4.3 Compensation for Growth
- ARCO has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.2
EPS Next 2Y-1.44%
EPS Next 3Y6.05%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 3.16%, 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 1.19. ARCO pays more dividend than 88.72% of the companies in the same industry.
- ARCO's Dividend Yield is rather good when compared to the S&P500 average which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.16% |
5.2 History
- On average, the dividend of ARCO grows each year by 17.60%, which is quite nice.
- ARCO has paid a dividend for at least 10 years, which is a reliable track record.
- ARCO has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)17.6%
Div Incr Years2
Div Non Decr Years3
5.3 Sustainability
- ARCO pays out 20.61% of its income as dividend. This is a sustainable payout ratio.
- ARCO's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP20.61%
EPS Next 2Y-1.44%
EPS Next 3Y6.05%
ARCOS DORADOS HOLDINGS INC-A / ARCO FAQ
Can you provide the ChartMill fundamental rating for ARCOS DORADOS HOLDINGS INC-A?
ChartMill assigns a fundamental rating of 4 / 10 to ARCO.
What is the valuation status of ARCOS DORADOS HOLDINGS INC-A (ARCO) stock?
ChartMill assigns a valuation rating of 5 / 10 to ARCOS DORADOS HOLDINGS INC-A (ARCO). This can be considered as Fairly Valued.
What is the profitability of ARCO stock?
ARCOS DORADOS HOLDINGS INC-A (ARCO) has a profitability rating of 6 / 10.
Can you provide the PE and PB ratios for ARCO stock?
The Price/Earnings (PE) ratio for ARCOS DORADOS HOLDINGS INC-A (ARCO) is 13.66 and the Price/Book (PB) ratio is 2.2.
What is the financial health of ARCOS DORADOS HOLDINGS INC-A (ARCO) stock?
The financial health rating of ARCOS DORADOS HOLDINGS INC-A (ARCO) is 2 / 10.