ARCOS DORADOS HOLDINGS INC-A (ARCO) Stock Fundamental Analysis
NYSE:ARCO - New York Stock Exchange, Inc. - VGG0457F1071 - Common Stock - Currency: USD
We assign a fundamental rating of 4 out of 10 to ARCO. ARCO was compared to 136 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 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.
ARCO had a positive operating cash flow in the past year.
ARCO had positive earnings in 4 of the past 5 years.
In the past 5 years ARCO always reported a positive cash flow from operatings.
1.2 Ratios
Looking at the Return On Assets, with a value of 5.14%, ARCO is in the better half of the industry, outperforming 70.59% of the companies in the same industry.
ARCO has a better Return On Equity (29.28%) than 83.09% of its industry peers.
ARCO's Return On Invested Capital of 9.14% is fine compared to the rest of the industry. ARCO outperforms 71.32% of its industry peers.
The Average Return On Invested Capital over the past 3 years for ARCO is significantly below the industry average of 15.76%.
The last Return On Invested Capital (9.14%) for ARCO is above the 3 year average (8.94%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.14% | ||
| ROE | 29.28% | ||
| ROIC | 9.14% |
ROA(3y)5.49%
ROA(5y)2.38%
ROE(3y)35.94%
ROE(5y)10.55%
ROIC(3y)8.94%
ROIC(5y)N/A
1.3 Margins
ARCO has a Profit Margin (3.33%) which is in line with its industry peers.
ARCO's Profit Margin has improved in the last couple of years.
With a Operating Margin value of 7.26%, ARCO perfoms like the industry average, outperforming 45.59% of the companies in the same industry.
ARCO's Operating Margin has improved in the last couple of years.
ARCO has a worse Gross Margin (13.12%) than 88.97% of its industry peers.
ARCO's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 7.26% | ||
| PM (TTM) | 3.33% | ||
| GM | 13.12% |
OM growth 3Y13.6%
OM growth 5Y6.08%
PM growth 3Y24.84%
PM growth 5Y4.27%
GM growth 3Y-17.52%
GM growth 5Y1.1%
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.
ARCO has more shares outstanding than it did 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 2.51. 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.
ARCO has a better Altman-Z score (2.51) than 73.53% of its industry peers.
ARCO has a Debt/Equity ratio of 1.53. This is a high value indicating a heavy dependency on external financing.
The Debt to Equity ratio of ARCO (1.53) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.53 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 2.51 |
ROIC/WACC1.12
WACC8.15%
2.3 Liquidity
ARCO has a Current Ratio of 0.61. This is a bad value and indicates that ARCO is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Current ratio value of 0.61, ARCO is not doing good in the industry: 69.12% of the companies in the same industry are doing better.
ARCO has a Quick Ratio of 0.61. 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 has a Quick ratio of 0.54. This is in the lower half of the industry: ARCO underperforms 66.91% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.61 | ||
| Quick Ratio | 0.54 |
3. Growth
3.1 Past
The earnings per share for ARCO have decreased strongly by -15.29% in the last year.
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 3.19%.
ARCO shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 8.60% yearly.
EPS 1Y (TTM)-15.29%
EPS 3Y45.99%
EPS 5Y11.38%
EPS Q2Q%7.69%
Revenue 1Y (TTM)3.19%
Revenue growth 3Y18.89%
Revenue growth 5Y8.6%
Sales Q2Q%-2.83%
3.2 Future
Based on estimates for the next years, ARCO will show a quite strong growth in Earnings Per Share. The EPS will grow by 11.73% on average per year.
Based on estimates for the next years, ARCO will show a small growth in Revenue. The Revenue will grow by 6.62% on average per year.
EPS Next Y-0.6%
EPS Next 2Y7.45%
EPS Next 3Y15.05%
EPS Next 5Y11.73%
Revenue Next Year4.06%
Revenue Next 2Y6.29%
Revenue Next 3Y8.33%
Revenue Next 5Y6.62%
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 stable.
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
With a Price/Earnings ratio of 10.63, the valuation of ARCO can be described as very reasonable.
Compared to the rest of the industry, the Price/Earnings ratio of ARCO indicates a rather cheap valuation: ARCO is cheaper than 88.97% of the companies listed in the same industry.
ARCO is valuated cheaply when we compare the Price/Earnings ratio to 28.87, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 10.69, which indicates a very decent valuation of ARCO.
Based on the Price/Forward Earnings ratio, ARCO is valued cheaper than 86.76% of the companies in the same industry.
ARCO is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 21.38, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.63 | ||
| Fwd PE | 10.69 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, ARCO is valued cheaper than 94.85% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 4.33 |
4.3 Compensation for Growth
The decent profitability rating of ARCO may justify a higher PE ratio.
ARCO's earnings are expected to grow with 15.05% in the coming years. This may justify a more expensive valuation.
PEG (NY)N/A
PEG (5Y)0.93
EPS Next 2Y7.45%
EPS Next 3Y15.05%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.20%, ARCO has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 3.85, ARCO pays a better dividend. On top of this ARCO pays more dividend than 85.29% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.46, ARCO pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.2% |
5.2 History
The dividend of ARCO is nicely growing with an annual growth rate of 17.46%!
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)17.46%
Div Incr Years2
Div Non Decr Years2
5.3 Sustainability
ARCO pays out 33.99% of its income as dividend. This is a sustainable payout ratio.
The dividend of ARCO is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP33.99%
EPS Next 2Y7.45%
EPS Next 3Y15.05%
7.65
+0.08 (+1.06%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryHotels, Restaurants & Leisure
Earnings (Last)
Earnings (Next)
Inst Owners53.05%
Inst Owner Change-0.87%
Ins Owners4.5%
Ins Owner ChangeN/A
Market Cap1.61B
Analysts83.33
Price Target11.31 (47.84%)
Short Float %0.71%
Short Ratio0.83
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.2% |
Yearly Dividend0.24
Dividend Growth(5Y)17.46%
DP33.99%
Div Incr Years2
Div Non Decr Years2
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)16.42%
Min EPS beat(2)4.17%
Max EPS beat(2)28.68%
EPS beat(4)2
Avg EPS beat(4)2.29%
Min EPS beat(4)-19.26%
Max EPS beat(4)28.68%
EPS beat(8)4
Avg EPS beat(8)4.72%
EPS beat(12)7
Avg EPS beat(12)19.53%
EPS beat(16)10
Avg EPS beat(16)-44.03%
Revenue beat(2)0
Avg Revenue beat(2)-1.76%
Min Revenue beat(2)-2.79%
Max Revenue beat(2)-0.73%
Revenue beat(4)2
Avg Revenue beat(4)0.83%
Min Revenue beat(4)-2.79%
Max Revenue beat(4)3.88%
Revenue beat(8)5
Avg Revenue beat(8)0.41%
Revenue beat(12)8
Avg Revenue beat(12)1.37%
Revenue beat(16)12
Avg Revenue beat(16)1.77%
PT rev (1m)0.92%
PT rev (3m)-9.81%
EPS NQ rev (1m)-20%
EPS NQ rev (3m)-29.41%
EPS NY rev (1m)-1.17%
EPS NY rev (3m)-13.68%
Revenue NQ rev (1m)-2.53%
Revenue NQ rev (3m)-4.59%
Revenue NY rev (1m)0.13%
Revenue NY rev (3m)-2.91%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.63 | ||
| Fwd PE | 10.69 | ||
| P/S | 0.36 | ||
| P/FCF | N/A | ||
| P/OCF | 6.04 | ||
| P/B | 3.17 | ||
| P/tB | 3.65 | ||
| EV/EBITDA | 4.33 |
EPS(TTM)0.72
EY9.41%
EPS(NY)0.72
Fwd EY9.36%
FCF(TTM)-0.29
FCFYN/A
OCF(TTM)1.27
OCFY16.56%
SpS21.22
BVpS2.41
TBVpS2.1
PEG (NY)N/A
PEG (5Y)0.93
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.14% | ||
| ROE | 29.28% | ||
| ROCE | 15.26% | ||
| ROIC | 9.14% | ||
| ROICexc | 9.76% | ||
| ROICexgc | 10.09% | ||
| OM | 7.26% | ||
| PM (TTM) | 3.33% | ||
| GM | 13.12% | ||
| FCFM | N/A |
ROA(3y)5.49%
ROA(5y)2.38%
ROE(3y)35.94%
ROE(5y)10.55%
ROIC(3y)8.94%
ROIC(5y)N/A
ROICexc(3y)10.09%
ROICexc(5y)N/A
ROICexgc(3y)10.45%
ROICexgc(5y)N/A
ROCE(3y)14.73%
ROCE(5y)N/A
ROICexcg growth 3Y21.03%
ROICexcg growth 5Y13.14%
ROICexc growth 3Y20.78%
ROICexc growth 5Y12.93%
OM growth 3Y13.6%
OM growth 5Y6.08%
PM growth 3Y24.84%
PM growth 5Y4.27%
GM growth 3Y-17.52%
GM growth 5Y1.1%
F-Score4
Asset Turnover1.55
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.53 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | 1.55 | ||
| Cap/Depr | 184.74% | ||
| Cap/Sales | 7.33% | ||
| Interest Coverage | 6.24 | ||
| Cash Conversion | 53.17% | ||
| Profit Quality | N/A | ||
| Current Ratio | 0.61 | ||
| Quick Ratio | 0.54 | ||
| Altman-Z | 2.51 |
F-Score4
WACC8.15%
ROIC/WACC1.12
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)-15.29%
EPS 3Y45.99%
EPS 5Y11.38%
EPS Q2Q%7.69%
EPS Next Y-0.6%
EPS Next 2Y7.45%
EPS Next 3Y15.05%
EPS Next 5Y11.73%
Revenue 1Y (TTM)3.19%
Revenue growth 3Y18.89%
Revenue growth 5Y8.6%
Sales Q2Q%-2.83%
Revenue Next Year4.06%
Revenue Next 2Y6.29%
Revenue Next 3Y8.33%
Revenue Next 5Y6.62%
EBIT growth 1Y3.32%
EBIT growth 3Y35.07%
EBIT growth 5Y15.21%
EBIT Next Year68.4%
EBIT Next 3Y30.35%
EBIT Next 5Y23.6%
FCF growth 1Y-377.98%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y-30.14%
OCF growth 3Y1.13%
OCF growth 5Y3.61%