ARCOS DORADOS HOLDINGS INC-A (ARCO) Stock Fundamental Analysis
NYSE:ARCO - New York Stock Exchange, Inc. - VGG0457F1071 - Common Stock - Currency: USD
ARCO gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 135 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 decent growth rate and is not valued too expensively.
1. Profitability
1.1 Basic Checks
ARCO had positive earnings in the past year.
ARCO had a positive operating cash flow in the past year.
ARCO had positive earnings in 4 of the past 5 years.
Each year in the past 5 years ARCO had a positive operating cash flow.
1.2 Ratios
ARCO's Return On Assets of 4.94% is fine compared to the rest of the industry. ARCO outperforms 68.89% of its industry peers.
ARCO has a better Return On Equity (28.53%) than 82.96% of its industry peers.
Looking at the Return On Invested Capital, with a value of 8.82%, ARCO is in the better half of the industry, outperforming 70.37% of the companies in the same industry.
ARCO had an Average Return On Invested Capital over the past 3 years of 7.73%. This is significantly below the industry average of 16.11%.
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
ARCO's Profit Margin of 3.25% is in line compared to the rest of the industry. ARCO outperforms 52.59% of its industry peers.
ARCO's Profit Margin has improved in the last couple of years.
The Operating Margin of ARCO (6.74%) is comparable to the rest of the industry.
ARCO's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 12.93%, ARCO is doing worse than 89.63% of the companies in the same industry.
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.
Compared to 1 year ago, ARCO has more shares outstanding
Compared to 5 years ago, ARCO has about the same amount of shares outstanding.
Compared to 1 year ago, ARCO has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 2.44 indicates that ARCO is not a great score, but indicates only limited risk for bankruptcy at the moment.
ARCO has a better Altman-Z score (2.44) than 69.63% 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.
ARCO has a Debt to Equity ratio of 1.48. This is comparable to the rest of the industry: ARCO outperforms 60.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.48 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 2.44 |
ROIC/WACC1.03
WACC8.53%
2.3 Liquidity
A Current Ratio of 0.63 indicates that ARCO may have some problems paying its short term obligations.
With a Current ratio value of 0.63, ARCO is not doing good in the industry: 66.67% of the companies in the same industry are doing better.
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 65.93% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.63 | ||
| Quick Ratio | 0.57 |
3. Growth
3.1 Past
ARCO shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -17.65%.
Measured over the past years, ARCO shows a quite strong growth in Earnings Per Share. The EPS has been growing by 16.81% on average per year.
ARCO shows a small growth in Revenue. In the last year, the Revenue has grown by 7.82%.
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.
ARCO is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 7.22% yearly.
EPS Next Y-24%
EPS Next 2Y-7.7%
EPS Next 3Y-0.64%
EPS Next 5Y9.64%
Revenue Next Year5.09%
Revenue Next 2Y4.51%
Revenue Next 3Y6.52%
Revenue Next 5Y7.22%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
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 11.51 indicates a reasonable valuation of ARCO.
Based on the Price/Earnings ratio, ARCO is valued cheaper than 88.89% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 29.35, ARCO is valued rather cheaply.
ARCO is valuated reasonably with a Price/Forward Earnings ratio of 11.13.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ARCO indicates a rather cheap valuation: ARCO is cheaper than 88.89% of the companies listed in the same industry.
ARCO's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 22.10.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.51 | ||
| Fwd PE | 11.13 |
4.2 Price Multiples
94.81% 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 | 4.77 |
4.3 Compensation for Growth
The decent profitability rating of ARCO may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)0.68
EPS Next 2Y-7.7%
EPS Next 3Y-0.64%
5. Dividend
5.1 Amount
ARCO has a Yearly Dividend Yield of 3.03%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 3.24, ARCO pays a better dividend. On top of this ARCO pays more dividend than 86.67% of the companies listed in the same industry.
ARCO's Dividend Yield is a higher than the S&P500 average which is at 2.33.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.03% |
5.2 History
On average, the dividend of ARCO grows each year by 14.41%, which is quite nice.
ARCO has paid a dividend for at least 10 years, which is a reliable track record.
ARCO has decreased its dividend 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.
ARCO's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP31.71%
EPS Next 2Y-7.7%
EPS Next 3Y-0.64%
8.06
+0.15 (+1.9%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryHotels, Restaurants & Leisure
Earnings (Last)
Earnings (Next)
Inst Owners53.05%
Inst Owner Change3.96%
Ins Owners4.5%
Ins Owner ChangeN/A
Market Cap1.70B
Analysts83.08
Price Target11.21 (39.08%)
Short Float %0.81%
Short Ratio1.19
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.03% |
Yearly Dividend0.19
Dividend Growth(5Y)14.41%
DP31.71%
Div Incr Years2
Div Non Decr Years2
Ex-DateN/A
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)-9.41%
PT rev (3m)-15.45%
EPS NQ rev (1m)-3.03%
EPS NQ rev (3m)18.52%
EPS NY rev (1m)0.93%
EPS NY rev (3m)-3.62%
Revenue NQ rev (1m)-0.68%
Revenue NQ rev (3m)-0.93%
Revenue NY rev (1m)-0.22%
Revenue NY rev (3m)0.26%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.51 | ||
| Fwd PE | 11.13 | ||
| P/S | 0.38 | ||
| P/FCF | N/A | ||
| P/OCF | 5.49 | ||
| P/B | 3.31 | ||
| P/tB | 3.82 | ||
| EV/EBITDA | 4.77 |
EPS(TTM)0.7
EY8.68%
EPS(NY)0.72
Fwd EY8.99%
FCF(TTM)-0.29
FCFYN/A
OCF(TTM)1.47
OCFY18.23%
SpS21.37
BVpS2.43
TBVpS2.11
PEG (NY)N/A
PEG (5Y)0.68
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 | 2.44 |
F-Score5
WACC8.53%
ROIC/WACC1.03
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-24%
EPS Next 2Y-7.7%
EPS Next 3Y-0.64%
EPS Next 5Y9.64%
Revenue 1Y (TTM)7.82%
Revenue growth 3Y29.73%
Revenue growth 5Y7.05%
Sales Q2Q%0.76%
Revenue Next Year5.09%
Revenue Next 2Y4.51%
Revenue Next 3Y6.52%
Revenue Next 5Y7.22%
EBIT growth 1Y-3.32%
EBIT growth 3YN/A
EBIT growth 5Y21.09%
EBIT Next Year54.91%
EBIT Next 3Y23.42%
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%