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 133 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
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.
ARCO had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
ARCO has a Return On Assets of 3.87%. This is in the better half of the industry: ARCO outperforms 61.65% of its industry peers.
The Return On Equity of ARCO (26.04%) is better than 82.71% of its industry peers.
ARCO's Return On Invested Capital of 7.43% is fine compared to the rest of the industry. ARCO outperforms 62.41% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for ARCO is significantly below the industry average of 13.97%.
| 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
ARCO has a Profit Margin of 3.00%. This is comparable to the rest of the industry: ARCO outperforms 49.62% of its industry peers.
In the last couple of years the Profit Margin of ARCO has grown nicely.
ARCO has a Operating Margin of 6.77%. This is comparable to the rest of the industry: ARCO outperforms 42.86% of its industry peers.
In the last couple of years the Operating Margin of ARCO has grown nicely.
The Gross Margin of ARCO (12.85%) is worse than 90.98% of its industry peers.
ARCO's Gross Margin has improved in the last couple of years.
| 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
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 about the same amount of shares outstanding.
ARCO has more shares outstanding than it did 5 years ago.
Compared to 1 year ago, ARCO has a worse debt to assets ratio.
2.2 Solvency
An Altman-Z score of 2.10 indicates that ARCO is not a great score, but indicates only limited risk for bankruptcy at the moment.
With a decent Altman-Z score value of 2.10, ARCO is doing good in the industry, outperforming 60.90% of the companies in the same industry.
A Debt/Equity ratio of 1.88 is on the high side and indicates that ARCO has dependencies on debt financing.
ARCO's Debt to Equity ratio of 1.88 is in line compared to the rest of the industry. ARCO outperforms 56.39% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.88 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 2.1 |
ROIC/WACC0.87
WACC8.53%
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's Current ratio of 0.86 is in line compared to the rest of the industry. ARCO outperforms 46.62% of its industry peers.
A Quick Ratio of 0.81 indicates that ARCO may have some problems paying its short term obligations.
ARCO's Quick ratio of 0.81 is in line compared to the rest of the industry. ARCO outperforms 46.62% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.86 | ||
| Quick Ratio | 0.81 |
3. Growth
3.1 Past
The earnings per share for ARCO have decreased strongly by -19.75% in the last year.
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.
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)-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 quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 10.96% yearly.
ARCO is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 6.70% yearly.
EPS Next Y-2.43%
EPS Next 2Y7.12%
EPS Next 3Y12.5%
EPS Next 5Y10.96%
Revenue Next Year4.5%
Revenue Next 2Y6.3%
Revenue Next 3Y7.94%
Revenue Next 5Y6.7%
3.3 Evolution
The EPS growth rate is stable: in the next years the growth will be about the same 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
The Price/Earnings ratio is 11.55, which indicates a very decent valuation of ARCO.
ARCO's Price/Earnings ratio is rather cheap when compared to the industry. ARCO is cheaper than 89.47% of the companies in the same industry.
ARCO's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 26.55.
With a Price/Forward Earnings ratio of 9.09, the valuation of ARCO can be described as very reasonable.
ARCO's Price/Forward Earnings ratio is rather cheap when compared to the industry. ARCO is cheaper than 89.47% of the companies in the same industry.
ARCO is valuated cheaply when we compare the Price/Forward Earnings ratio to 22.40, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.55 | ||
| Fwd PE | 9.09 |
4.2 Price Multiples
96.99% 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 | 4.49 |
4.3 Compensation for Growth
ARCO has a very decent profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as ARCO's earnings are expected to grow with 12.50% in the coming years.
PEG (NY)N/A
PEG (5Y)1.02
EPS Next 2Y7.12%
EPS Next 3Y12.5%
5. Dividend
5.1 Amount
ARCO has a Yearly Dividend Yield of 3.19%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 3.82, ARCO pays a better dividend. On top of this ARCO pays more dividend than 85.71% of the companies listed in the same industry.
ARCO's Dividend Yield is a higher than the S&P500 average which is at 2.39.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.19% |
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
37.68% of the earnings are spent on dividend by ARCO. This is a low number and 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 2Y7.12%
EPS Next 3Y12.5%
7.51
+0.03 (+0.4%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Services
GICS IndustryHotels, Restaurants & Leisure
Earnings (Last)
Earnings (Next)
Inst Owners53.05%
Inst Owner Change14.61%
Ins Owners4.5%
Ins Owner ChangeN/A
Market Cap1.58B
Analysts82.86
Price Target10.68 (42.21%)
Short Float %1.16%
Short Ratio1.37
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.19% |
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)-5.6%
PT rev (3m)-4.73%
EPS NQ rev (1m)-40%
EPS NQ rev (3m)-40%
EPS NY rev (1m)-1.84%
EPS NY rev (3m)-2.99%
Revenue NQ rev (1m)3.75%
Revenue NQ rev (3m)5.69%
Revenue NY rev (1m)0.21%
Revenue NY rev (3m)0.55%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.55 | ||
| Fwd PE | 9.09 | ||
| P/S | 0.35 | ||
| P/FCF | N/A | ||
| P/OCF | 6.02 | ||
| P/B | 3.07 | ||
| P/tB | 4.15 | ||
| EV/EBITDA | 4.49 |
EPS(TTM)0.65
EY8.66%
EPS(NY)0.83
Fwd EY11%
FCF(TTM)-0.25
FCFYN/A
OCF(TTM)1.25
OCFY16.61%
SpS21.2
BVpS2.45
TBVpS1.81
PEG (NY)N/A
PEG (5Y)1.02
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 | 2.1 |
F-Score4
WACC8.53%
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-2.43%
EPS Next 2Y7.12%
EPS Next 3Y12.5%
EPS Next 5Y10.96%
Revenue 1Y (TTM)0.97%
Revenue growth 3Y18.89%
Revenue growth 5Y8.6%
Sales Q2Q%-0.44%
Revenue Next Year4.5%
Revenue Next 2Y6.3%
Revenue Next 3Y7.94%
Revenue Next 5Y6.7%
EBIT growth 1Y-4.19%
EBIT growth 3Y34.81%
EBIT growth 5Y15.08%
EBIT Next Year66.57%
EBIT Next 3Y28.45%
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%