ARCOS DORADOS HOLDINGS INC-A (ARCO) Stock Fundamental Analysis
NYSE:ARCO - New York Stock Exchange, Inc. - VGG0457F1071 - Common Stock - Currency: USD
Overall ARCO gets a fundamental rating of 4 out of 10. We evaluated ARCO against 133 industry peers in the Hotels, Restaurants & Leisure industry. ARCO has a medium profitability rating, but doesn't score so well on its financial health evaluation. ARCO has a decent growth rate and is not valued too expensively.
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
ARCO has a Return On Assets of 3.87%. This is in the better half of the industry: ARCO outperforms 60.90% of its industry peers.
ARCO has a better Return On Equity (26.04%) than 82.71% of its industry peers.
With a decent Return On Invested Capital value of 7.43%, ARCO is doing good in the industry, outperforming 61.65% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for ARCO is below the industry average of 13.81%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.87% | ||
| ROE | 26.04% | ||
| ROIC | 7.43% |
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
ARCO has a Profit Margin of 3.00%. This is comparable to the rest of the industry: ARCO outperforms 49.62% of its industry peers.
In the last couple of years the Profit Margin of ARCO has grown nicely.
ARCO has a Operating Margin of 6.77%. This is comparable to the rest of the industry: ARCO outperforms 43.61% of its industry peers.
In the last couple of years the Operating Margin of ARCO has grown nicely.
ARCO's Gross Margin of 12.85% is on the low side compared to the rest of the industry. ARCO is outperformed by 89.47% of its industry peers.
ARCO's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 6.77% | ||
| PM (TTM) | 3% | ||
| GM | 12.85% |
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
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so ARCO is still creating some value.
Compared to 1 year ago, ARCO has about the same amount of shares outstanding.
ARCO has more shares outstanding than it did 5 years ago.
Compared to 1 year ago, ARCO has a worse debt to assets ratio.
2.2 Solvency
An Altman-Z score of 2.11 indicates that ARCO is not a great score, but indicates only limited risk for bankruptcy at the moment.
With a Altman-Z score value of 2.11, ARCO perfoms like the industry average, outperforming 58.65% of the companies in the same industry.
ARCO has a Debt/Equity ratio of 1.88. This is a high value indicating a heavy dependency on external financing.
ARCO's Debt to Equity ratio of 1.88 is in line compared to the rest of the industry. ARCO outperforms 55.64% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.88 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 2.11 |
ROIC/WACC0.88
WACC8.43%
2.3 Liquidity
A Current Ratio of 0.86 indicates that ARCO may have some problems paying its short term obligations.
ARCO has a Current ratio (0.86) which is in line with its industry peers.
A Quick Ratio of 0.81 indicates that ARCO may have some problems paying its short term obligations.
With a Quick ratio value of 0.81, ARCO perfoms like the industry average, outperforming 47.37% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.86 | ||
| 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 -19.75%.
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.
Looking at the last year, ARCO shows a small growth in Revenue. The Revenue has grown by 0.97% in the last year.
The Revenue has been growing by 8.60% on average over the past years. This is quite good.
EPS 1Y (TTM)-19.75%
EPS 3Y45.99%
EPS 5Y11.38%
EPS Q2Q%-50%
Revenue 1Y (TTM)0.97%
Revenue growth 3Y18.89%
Revenue growth 5Y8.6%
Sales Q2Q%-0.44%
3.2 Future
Based on estimates for the next years, ARCO will show a small growth in Earnings Per Share. The EPS will grow by 6.78% on average per year.
Based on estimates for the next years, ARCO will show a small growth in Revenue. The Revenue will grow by 6.70% on average per year.
EPS Next Y-5.08%
EPS Next 2Y6.93%
EPS Next 3Y11.65%
EPS Next 5Y6.78%
Revenue Next Year4.5%
Revenue Next 2Y6.3%
Revenue Next 3Y7.94%
Revenue Next 5Y6.7%
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 decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 11.62, the valuation of ARCO can be described as reasonable.
Based on the Price/Earnings ratio, ARCO is valued cheaper than 90.98% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 27.30, ARCO is valued rather cheaply.
Based on the Price/Forward Earnings ratio of 9.17, the valuation of ARCO can be described as reasonable.
90.23% of the companies in the same industry are more expensive than ARCO, based on the Price/Forward Earnings ratio.
ARCO is valuated cheaply when we compare the Price/Forward Earnings ratio to 21.76, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.62 | ||
| Fwd PE | 9.17 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, ARCO is valued cheaper than 96.99% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 4.54 |
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)1.02
EPS Next 2Y6.93%
EPS Next 3Y11.65%
5. Dividend
5.1 Amount
ARCO has a Yearly Dividend Yield of 3.05%.
Compared to an average industry Dividend Yield of 3.53, ARCO pays a better dividend. On top of this ARCO pays more dividend than 85.71% of the companies listed in the same industry.
ARCO's Dividend Yield is a higher than the S&P500 average which is at 2.37.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.05% |
5.2 History
The dividend of ARCO is nicely growing with an annual growth rate of 17.60%!
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
37.68% of the earnings are spent on dividend by ARCO. This is a low number and sustainable payout ratio.
ARCO's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP37.68%
EPS Next 2Y6.93%
EPS Next 3Y11.65%
7.55
-0.04 (-0.53%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryHotels, Restaurants & Leisure
Earnings (Last)
Earnings (Next)
Inst Owners48.03%
Inst Owner Change0%
Ins Owners4.55%
Ins Owner ChangeN/A
Market Cap1.59B
Analysts82.86
Price Target10.68 (41.46%)
Short Float %1.28%
Short Ratio1.68
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.05% |
Yearly Dividend0.24
Dividend Growth(5Y)17.6%
DP37.68%
Div Incr Years2
Div Non Decr Years3
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-5.82%
Min EPS beat(2)-40.32%
Max EPS beat(2)28.68%
EPS beat(4)2
Avg EPS beat(4)-2.97%
Min EPS beat(4)-40.32%
Max EPS beat(4)28.68%
EPS beat(8)3
Avg EPS beat(8)-4.16%
EPS beat(12)6
Avg EPS beat(12)7.2%
EPS beat(16)10
Avg EPS beat(16)32.98%
Revenue beat(2)1
Avg Revenue beat(2)-1.32%
Min Revenue beat(2)-2.79%
Max Revenue beat(2)0.15%
Revenue beat(4)2
Avg Revenue beat(4)-0.1%
Min Revenue beat(4)-2.79%
Max Revenue beat(4)2.96%
Revenue beat(8)5
Avg Revenue beat(8)0.19%
Revenue beat(12)8
Avg Revenue beat(12)0.9%
Revenue beat(16)12
Avg Revenue beat(16)1.73%
PT rev (1m)-1.15%
PT rev (3m)-4.73%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-40%
EPS NY rev (1m)-2.72%
EPS NY rev (3m)-5.63%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)5.69%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.55%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.62 | ||
| Fwd PE | 9.17 | ||
| P/S | 0.36 | ||
| P/FCF | N/A | ||
| P/OCF | 6.05 | ||
| P/B | 3.09 | ||
| P/tB | 4.17 | ||
| EV/EBITDA | 4.54 |
EPS(TTM)0.65
EY8.61%
EPS(NY)0.82
Fwd EY10.9%
FCF(TTM)-0.25
FCFYN/A
OCF(TTM)1.25
OCFY16.52%
SpS21.2
BVpS2.45
TBVpS1.81
PEG (NY)N/A
PEG (5Y)1.02
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.87% | ||
| ROE | 26.04% | ||
| ROCE | 12.25% | ||
| ROIC | 7.43% | ||
| ROICexc | 9.26% | ||
| ROICexgc | 9.92% | ||
| OM | 6.77% | ||
| PM (TTM) | 3% | ||
| GM | 12.85% | ||
| FCFM | N/A |
ROA(3y)5.49%
ROA(5y)2.38%
ROE(3y)35.94%
ROE(5y)10.55%
ROIC(3y)8.93%
ROIC(5y)N/A
ROICexc(3y)10.07%
ROICexc(5y)N/A
ROICexgc(3y)10.43%
ROICexgc(5y)N/A
ROCE(3y)14.7%
ROCE(5y)N/A
ROICexcg growth 3Y20.8%
ROICexcg growth 5Y13.02%
ROICexc growth 3Y20.55%
ROICexc growth 5Y12.8%
OM growth 3Y13.39%
OM growth 5Y5.96%
PM growth 3Y24.84%
PM growth 5Y4.27%
GM growth 3Y1.69%
GM growth 5Y14.64%
F-Score4
Asset Turnover1.29
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.88 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | 2.01 | ||
| Cap/Depr | 174.59% | ||
| Cap/Sales | 7.06% | ||
| Interest Coverage | 5.46 | ||
| Cash Conversion | 54.45% | ||
| Profit Quality | N/A | ||
| Current Ratio | 0.86 | ||
| Quick Ratio | 0.81 | ||
| Altman-Z | 2.11 |
F-Score4
WACC8.43%
ROIC/WACC0.88
Cap/Depr(3y)202.4%
Cap/Depr(5y)154.14%
Cap/Sales(3y)7.21%
Cap/Sales(5y)6.06%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-19.75%
EPS 3Y45.99%
EPS 5Y11.38%
EPS Q2Q%-50%
EPS Next Y-5.08%
EPS Next 2Y6.93%
EPS Next 3Y11.65%
EPS Next 5Y6.78%
Revenue 1Y (TTM)0.97%
Revenue growth 3Y18.89%
Revenue growth 5Y8.6%
Sales Q2Q%-0.44%
Revenue Next Year4.5%
Revenue Next 2Y6.3%
Revenue Next 3Y7.94%
Revenue Next 5Y6.7%
EBIT growth 1Y-4.19%
EBIT growth 3Y34.81%
EBIT growth 5Y15.08%
EBIT Next Year66.57%
EBIT Next 3Y28.45%
EBIT Next 5Y23.06%
FCF growth 1Y-152.22%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y-22.64%
OCF growth 3Y1.13%
OCF growth 5Y3.61%