ARCOS DORADOS HOLDINGS INC-A (ARCO) Stock Fundamental Analysis
NYSE:ARCO - New York Stock Exchange, Inc. - VGG0457F1071 - Common Stock - Currency: USD
Taking everything into account, ARCO scores 4 out of 10 in our fundamental rating. ARCO was compared to 131 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
ARCO had positive earnings in the past year.
In the past year ARCO had a positive cash flow from operations.
Of the past 5 years ARCO 4 years were profitable.
In the past 5 years ARCO always reported a positive cash flow from operatings.
1.2 Ratios
ARCO has a better Return On Assets (3.87%) than 60.31% of its industry peers.
ARCO has a Return On Equity of 26.04%. This is amongst the best in the industry. ARCO outperforms 82.44% of its industry peers.
ARCO has a better Return On Invested Capital (7.43%) than 61.07% of its industry peers.
The Average Return On Invested Capital over the past 3 years for ARCO is significantly below the industry average of 15.81%.
| 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
With a Profit Margin value of 3.00%, ARCO perfoms like the industry average, outperforming 48.85% of the companies in the same industry.
In the last couple of years the Profit Margin of ARCO has grown nicely.
With a Operating Margin value of 6.77%, ARCO perfoms like the industry average, outperforming 43.51% of the companies in the same industry.
ARCO's Operating Margin has improved in the last couple of years.
ARCO has a Gross Margin of 12.85%. This is amonst the worse of the industry: ARCO underperforms 90.08% of its industry peers.
In the last couple of years the Gross Margin of ARCO has grown nicely.
| 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
ARCO has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
Compared to 1 year ago, ARCO has about the same amount of shares outstanding.
Compared to 5 years ago, ARCO has more shares outstanding
Compared to 1 year ago, ARCO has a worse debt to assets ratio.
2.2 Solvency
An Altman-Z score of 2.07 indicates that ARCO is not a great score, but indicates only limited risk for bankruptcy at the moment.
ARCO's Altman-Z score of 2.07 is in line compared to the rest of the industry. ARCO outperforms 55.73% of its industry peers.
A Debt/Equity ratio of 1.88 is on the high side and indicates that ARCO has dependencies on debt financing.
ARCO has a Debt to Equity ratio (1.88) which is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.88 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 2.07 |
ROIC/WACC0.87
WACC8.54%
2.3 Liquidity
ARCO has a Current Ratio of 0.86. 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 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.
ARCO has a Quick ratio of 0.81. This is comparable to the rest of the industry: ARCO outperforms 46.56% of its industry peers.
| 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%.
The Earnings Per Share has been growing by 11.38% on average over the past years. This is quite good.
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
ARCO is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 6.78% yearly.
The Revenue is expected to grow by 6.70% on average over the next years.
EPS Next Y-11.99%
EPS Next 2Y2.98%
EPS Next 3Y8.84%
EPS Next 5Y6.78%
Revenue Next Year4.19%
Revenue Next 2Y6.04%
Revenue Next 3Y7.05%
Revenue Next 5Y6.7%
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 decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 10.54, the valuation of ARCO can be described as very reasonable.
ARCO's Price/Earnings ratio is rather cheap when compared to the industry. ARCO is cheaper than 92.37% of the companies in the same industry.
When comparing the Price/Earnings ratio of ARCO to the average of the S&P500 Index (26.48), we can say ARCO is valued rather cheaply.
ARCO is valuated reasonably with a Price/Forward Earnings ratio of 8.97.
Based on the Price/Forward Earnings ratio, ARCO is valued cheaply inside the industry as 90.84% of the companies are valued more expensively.
ARCO's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 34.04.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.54 | ||
| Fwd PE | 8.97 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, ARCO is valued cheaper than 95.42% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 4.21 |
4.3 Compensation for Growth
The decent profitability rating of ARCO may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)0.93
EPS Next 2Y2.98%
EPS Next 3Y8.84%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.44%, ARCO has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 3.98, ARCO pays a better dividend. On top of this ARCO pays more dividend than 84.73% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.39, ARCO pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.44% |
5.2 History
On average, the dividend of ARCO grows each year by 17.60%, which is quite nice.
ARCO has been paying a dividend for at least 10 years, so it has 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
ARCO pays out 37.68% 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.
DP37.68%
EPS Next 2Y2.98%
EPS Next 3Y8.84%
6.85
-0.13 (-1.86%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryHotels, Restaurants & Leisure
Earnings (Last)
Earnings (Next)
Inst Owners51.42%
Inst Owner Change7.63%
Ins Owners4.55%
Ins Owner ChangeN/A
Market Cap1.44B
Analysts81.43
Price Target10.39 (51.68%)
Short Float %2.13%
Short Ratio3.06
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.44% |
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)-2.73%
PT rev (3m)-3.84%
EPS NQ rev (1m)9.53%
EPS NQ rev (3m)-48.89%
EPS NY rev (1m)0%
EPS NY rev (3m)-11.46%
Revenue NQ rev (1m)-5.86%
Revenue NQ rev (3m)-2.33%
Revenue NY rev (1m)0.08%
Revenue NY rev (3m)-0.08%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.54 | ||
| Fwd PE | 8.97 | ||
| P/S | 0.32 | ||
| P/FCF | N/A | ||
| P/OCF | 5.49 | ||
| P/B | 2.8 | ||
| P/tB | 3.78 | ||
| EV/EBITDA | 4.21 |
EPS(TTM)0.65
EY9.49%
EPS(NY)0.76
Fwd EY11.15%
FCF(TTM)-0.25
FCFYN/A
OCF(TTM)1.25
OCFY18.21%
SpS21.2
BVpS2.45
TBVpS1.81
PEG (NY)N/A
PEG (5Y)0.93
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 | 2.07 |
F-Score4
WACC8.54%
ROIC/WACC0.87
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-11.99%
EPS Next 2Y2.98%
EPS Next 3Y8.84%
EPS Next 5Y6.78%
Revenue 1Y (TTM)0.97%
Revenue growth 3Y18.89%
Revenue growth 5Y8.6%
Sales Q2Q%-0.44%
Revenue Next Year4.19%
Revenue Next 2Y6.04%
Revenue Next 3Y7.05%
Revenue Next 5Y6.7%
EBIT growth 1Y-4.19%
EBIT growth 3Y34.81%
EBIT growth 5Y15.08%
EBIT Next Year63.63%
EBIT Next 3Y27.47%
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%