ARCOS DORADOS HOLDINGS INC-A (ARCO)
VGG0457F1071 - Common Stock
Taking everything into account, ARCO scores 5 out of 10 in our fundamental rating. ARCO was compared to 135 industry peers in the Hotels, Restaurants & Leisure industry. There are concerns on the financial health of ARCO while its profitability can be described as average. ARCO has a decent growth rate and is not valued too expensively.
1. Profitability
1.1 Basic Checks
In the past year ARCO was profitable.
ARCO had a positive operating cash flow in the past year.
Of the past 5 years ARCO 4 years were profitable.
Each year in the past 5 years ARCO had a positive operating cash flow.
1.2 Ratios
Looking at the Return On Assets, with a value of 6.00%, ARCO is in the better half of the industry, outperforming 73.13% of the companies in the same industry.
ARCO has a better Return On Equity (35.18%) than 83.58% of its industry peers.
The Return On Invested Capital of ARCO (9.10%) is better than 68.66% of its industry peers.
The Average Return On Invested Capital over the past 3 years for ARCO is below the industry average of 10.18%.
The 3 year average ROIC (7.66%) for ARCO is below the current ROIC(9.10%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6% | ||
| ROE | 35.18% | ||
| ROIC | 9.1% |
ROA(3y)4.42%
ROA(5y)1.97%
ROE(3y)33.06%
ROE(5y)8.49%
ROIC(3y)7.66%
ROIC(5y)N/A
1.3 Margins
The Profit Margin of ARCO (4.18%) is comparable to the rest of the industry.
In the last couple of years the Profit Margin of ARCO has grown nicely.
ARCO has a Operating Margin of 7.25%. This is comparable to the rest of the industry: ARCO outperforms 44.78% of its industry peers.
In the last couple of years the Operating Margin of ARCO has grown nicely.
With a Gross Margin value of 13.78%, ARCO is not doing good in the industry: 91.04% of the companies in the same industry are doing better.
In the last couple of years the Gross Margin of ARCO has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 7.25% | ||
| PM (TTM) | 4.18% | ||
| GM | 13.78% |
OM growth 3YN/A
OM growth 5Y12.59%
PM growth 3YN/A
PM growth 5Y28.5%
GM growth 3Y-6.52%
GM growth 5Y0.52%
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.
The number of shares outstanding for ARCO has been increased compared to 1 year ago.
Compared to 5 years ago, ARCO has more shares outstanding
ARCO has a better debt/assets ratio than last year.
2.2 Solvency
ARCO has an Altman-Z score of 2.49. 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's Altman-Z score of 2.49 is fine compared to the rest of the industry. ARCO outperforms 77.61% of its industry peers.
ARCO has a debt to FCF ratio of 34.04. This is a negative value and a sign of low solvency as ARCO would need 34.04 years to pay back of all of its debts.
ARCO has a Debt to FCF ratio (34.04) which is in line with its industry peers.
A Debt/Equity ratio of 1.44 is on the high side and indicates that ARCO has dependencies on debt financing.
ARCO has a Debt to Equity ratio (1.44) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.44 | ||
| Debt/FCF | 34.04 | ||
| Altman-Z | 2.49 |
ROIC/WACC1.09
WACC8.38%
2.3 Liquidity
ARCO has a Current Ratio of 0.72. 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 0.72, ARCO is not doing good in the industry: 65.67% of the companies in the same industry are doing better.
A Quick Ratio of 0.66 indicates that ARCO may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.66, ARCO is doing worse than 67.16% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.72 | ||
| Quick Ratio | 0.66 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 25.00% over the past year.
ARCO shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 16.81% yearly.
ARCO shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 19.70%.
Measured over the past years, ARCO shows a small growth in Revenue. The Revenue has been growing by 7.05% on average per year.
EPS 1Y (TTM)25%
EPS 3YN/A
EPS 5Y16.81%
EPS growth Q2Q0%
Revenue 1Y (TTM)19.7%
Revenue growth 3Y29.73%
Revenue growth 5Y7.05%
Revenue growth Q2Q15.4%
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 10.90% yearly.
ARCO is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 12.80% yearly.
EPS Next Y9.2%
EPS Next 2Y9.41%
EPS Next 3Y10.9%
EPS Next 5YN/A
Revenue Next Year7.96%
Revenue Next 2Y7.61%
Revenue Next 3Y8.21%
Revenue Next 5Y12.8%
3.3 Evolution
The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
ARCO is valuated correctly with a Price/Earnings ratio of 12.75.
85.07% of the companies in the same industry are more expensive than ARCO, based on the Price/Earnings ratio.
Compared to an average S&P500 Price/Earnings ratio of 24.84, ARCO is valued a bit cheaper.
A Price/Forward Earnings ratio of 11.68 indicates a reasonable valuation of ARCO.
Based on the Price/Forward Earnings ratio, ARCO is valued cheaply inside the industry as 85.07% of the companies are valued more expensively.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.35, ARCO is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.75 | ||
| Fwd PE | 11.68 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ARCO indicates a rather cheap valuation: ARCO is cheaper than 88.81% of the companies listed in the same industry.
The rest of the industry has a similar Price/Free Cash Flow ratio as ARCO.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 104.42 | ||
| EV/EBITDA | 5.83 |
4.3 Compensation for Growth
ARCO's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
ARCO has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)1.39
PEG (5Y)0.76
EPS Next 2Y9.41%
EPS Next 3Y10.9%
5. Dividend
5.1 Amount
ARCO has a Yearly Dividend Yield of 2.23%.
Compared to an average industry Dividend Yield of 2.56, ARCO pays a better dividend. On top of this ARCO pays more dividend than 82.84% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.41, ARCO has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.23% |
5.2 History
On average, the dividend of ARCO grows each year by 14.28%, which is quite nice.
ARCO has paid a dividend for at least 10 years, which is a reliable track record.
The dividend of ARCO decreased recently.
Dividend Growth(5Y)14.28%
Div Incr Years1
Div Non Decr Years1
5.3 Sustainability
ARCO pays out 22.08% 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.
DP22.08%
EPS Next 2Y9.41%
EPS Next 3Y10.9%
ARCOS DORADOS HOLDINGS INC-A
NYSE:ARCO (4/26/2024, 7:04:00 PM)
After market: 10.84 0 (0%)10.84
+0.09 (+0.84%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryHotels, Restaurants & Leisure
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap2.28B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.23% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
Avg EPS beat(2)
Min EPS beat(2)
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EPS beat(4)
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EPS beat(8)
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EPS beat(12)
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EPS beat(16)
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Revenue beat(2)
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Min Revenue beat(2)
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Revenue beat(4)
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Revenue beat(8)
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Revenue beat(12)
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Revenue beat(16)
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PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.75 | ||
| Fwd PE | 11.68 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)1.39
PEG (5Y)0.76
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6% | ||
| ROE | 35.18% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 7.25% | ||
| PM (TTM) | 4.18% | ||
| GM | 13.78% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover1.43
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.44 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 0.72 | ||
| Quick Ratio | 0.66 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
Growth
EPS 1Y (TTM)25%
EPS 3YN/A
EPS 5Y
EPS growth Q2Q
EPS Next Y9.2%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)19.7%
Revenue growth 3Y29.73%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y