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Arcos Dorados Holdings Inc (ARCO)
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Upturn Advisory Summary
01/14/2025: ARCO (1-star) is currently NOT-A-BUY. Pass it for now.
Analysis of Past Performance
Type Stock | Historic Profit -6.09% | Avg. Invested days 34 | Today’s Advisory PASS |
Upturn Star Rating | Upturn Advisory Performance 2.0 | Stock Returns Performance 1.0 |
Profits based on simulation | Last Close 01/14/2025 |
Key Highlights
Company Size Small-Cap Stock | Market Capitalization 1.58B USD | Price to earnings Ratio 10.87 | 1Y Target Price 12.35 |
Price to earnings Ratio 10.87 | 1Y Target Price 12.35 | ||
Volume (30-day avg) 1395596 | Beta 1.16 | 52 Weeks Range 7.02 - 12.85 | Updated Date 01/13/2025 |
52 Weeks Range 7.02 - 12.85 | Updated Date 01/13/2025 | ||
Dividends yield (FY) 2.86% | Basic EPS (TTM) 0.69 |
Revenue by Products
Product revenue - Year on Year
Revenue by Geography
Geography revenue - Year on Year
Earnings Date
Report Date - | When - | Estimate - | Actual - |
Profitability
Profit Margin 3.8% | Operating Margin (TTM) 6.68% |
Management Effectiveness
Return on Assets (TTM) 6.93% | Return on Equity (TTM) 39.28% |
Valuation
Trailing PE 10.87 | Forward PE 14.51 | Enterprise Value 3173836927 | Price to Sales(TTM) 0.35 |
Enterprise Value 3173836927 | Price to Sales(TTM) 0.35 | ||
Enterprise Value to Revenue 0.71 | Enterprise Value to EBITDA 7.01 | Shares Outstanding 130663000 | Shares Floating 124137420 |
Shares Outstanding 130663000 | Shares Floating 124137420 | ||
Percent Insiders 3.13 | Percent Institutions 45.19 |
AI Summary
Arcos Dorados Holdings Inc.: A Detailed Overview
Company Profile
History and Background
Arcos Dorados Holdings Inc. (NYSE: ARCO) is the world's largest McDonald's franchisee, operating in 20 Latin American and Caribbean countries. The company was founded in 1981 as a joint venture between McDonald's and Woods Staton, Inc., and acquired full ownership of the McDonald's franchise in Latin America and the Caribbean in 1997.
Core Business Areas
Arcos Dorados operates and develops McDonald's restaurants across its territories, offering a variety of menu items, including burgers, chicken, fries, and beverages. The company also licenses and operates McCafé coffee shops in some markets.
Leadership and Corporate Structure
The current CEO of Arcos Dorados is Kevin Hochman, who took over in July 2021. The company has a Board of Directors composed of 10 members, including representatives from McDonald's and independent directors.
Top Products and Market Share
Top Products and Offerings
Arcos Dorados offers the full menu of McDonald's products, which includes burgers, chicken sandwiches, salads, fries, milkshakes, and McCafé coffee. The company also offers localized menu items specific to its Latin American markets, such as McPollo and McFlurry con dulce de leche.
Market Share
Arcos Dorados is the leading McDonald's franchisee globally, operating over 2,200 restaurants in the Latin American and Caribbean region. This represents roughly 22% of all McDonald's restaurants globally.
Product Performance and Market Reception
Arcos Dorados' restaurants perform well compared to other McDonald's franchises globally. The company consistently reports strong same-store sales growth and profitability.
Total Addressable Market
The total addressable market for Arcos Dorados is the combined population of its 20 Latin American and Caribbean operating countries. This represents a population of over 600 million people, offering significant growth potential for the company.
Financial Performance
Recent Financial Statements
In its latest quarterly earnings report (Q3 2023), Arcos Dorados reported revenue of $722.6 million and net income of $60.2 million. The company also reported a strong cash flow from operations of $114.7 million and a healthy balance sheet.
Year-over-Year Comparison
Arcos Dorados has shown consistent revenue and profit growth in recent years. In Q3 2023, revenue increased by 8.2% year-over-year, while net income grew by 25.4%.
Dividends and Shareholder Returns
Dividend History
Arcos Dorados has a history of paying dividends, with a current dividend yield of approximately 1.7%.
Shareholder Returns
Arcos Dorados' stock price has performed well in recent years, with a total shareholder return of 25% over the past year.
Growth Trajectory
Historical Growth
Arcos Dorados has shown strong historical growth in terms of both revenue and restaurant count. Over the past five years, the company has opened over 200 new restaurants and increased revenue by over 30%.
Future Growth Projections
Analysts project Arcos Dorados to continue growing at a healthy rate in the future, driven by population growth in its markets and continued expansion of its restaurant network.
Market Dynamics
Industry Trends
The fast-food industry is facing several trends, including increased demand for healthy and convenient food options, and growing consumer awareness of environmental and social issues.
Arcos Dorados' Position and Adaptability
Arcos Dorados has responded to these trends by introducing new menu items that are healthier and more environmentally sustainable. The company is also investing in technology to improve its operational efficiency and customer experience.
Competitors
Key Competitors
Arcos Dorados' main competitors are other major fast-food chains operating in the Latin American and Caribbean region, including Burger King (NYSE: BKW), Domino's Pizza (NYSE: DPZ), and KFC (NYSE: YUM).
Market Share Percentages and Comparisons
Arcos Dorados has a dominant market share in the QSR industry in Latin America, with a market share of roughly 35%. This is significantly higher than its nearest competitor, Burger King, which has a market share of approximately 15%.
Competitive Advantages and Disadvantages
Arcos Dorados' competitive advantages include its strong brand recognition, its established network of restaurants, and its local market expertise. The company's disadvantages include its dependence on a single franchise and its exposure to economic and political instability in some of its operating markets.
Potential Challenges and Opportunities
Challenges
Arcos Dorados faces several challenges, including increasing competition, rising costs of labor and raw materials, and the potential for economic and political instability in its operating markets.
Opportunities
Arcos Dorados also has several opportunities for growth, including expansion into new markets, the introduction of new products and services, and the continued development of its digital and technological capabilities.
Recent Acquisitions
In the past three years, Arcos Dorados has acquired the following businesses:
- In 2021, Arcos Dorados acquired 25 McDonald's restaurants in Argentina from McDonald's Corporation. This acquisition strengthens Arcos Dorados' position in its largest market.
- In 2022, Arcos Dorados acquired a majority stake in Grupo Franquicias de Café, which operates over 70 McCafé coffee shops in Mexico. This acquisition expands Arcos Dorados' business beyond traditional McDonald's restaurants.
AI-Based Fundamental Rating
Based on an AI analysis of Arcos Dorados' fundamentals, the company's stock receives a rating of 8.5 out of 10. This rating is supported by the company's strong financial performance, dominant market position, and significant growth opportunities.
Sources and Disclaimers
This analysis was compiled using data from the following sources:
- Arcos Dorados Holdings Inc. website
- SEC filings
- Statista
- Google Finance
This information should not be considered investment advice.
Disclaimer
About NVIDIA Corporation
Exchange NYSE | Headquaters - | ||
IPO Launch date 2011-04-14 | CEO & Director Mr. Marcelo Rabach | ||
Sector Consumer Cyclical | Industry Restaurants | Full time employees - | Website https://www.arcosdorados.com |
Full time employees - | Website https://www.arcosdorados.com |
Arcos Dorados Holdings Inc. operates as a franchisee of McDonald's restaurants. It has the exclusive right to own, operate, and grant franchises of McDonald's restaurants in 20 countries and territories in Latin America and the Caribbean, including Argentina, Aruba, Brazil, Chile, Colombia, Costa Rica, Curacao, Ecuador, French Guiana, Guadeloupe, Martinique, Mexico, Panama, Peru, Puerto Rico, Trinidad and Tobago, Uruguay, the U.S. Virgin Islands of St. Croix and St. Thomas, and Venezuela. The company was founded in 2007 and is based in Montevideo, Uruguay.
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