Arcos Dorados Holdings Inc.
Arcos Dorados Holdings Inc. Fundamental Analysis
Arcos Dorados Holdings Inc. (ARCO) shows moderate financial fundamentals with a PE ratio of 7.65, profit margin of 5.39%, and ROE of 41.79%. The company generates $4.6B in annual revenue with moderate year-over-year growth of 3.19%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 31.7/100 based on profitability, valuation, growth, and balance sheet metrics. The F grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze ARCO's fundamental strength across five key dimensions:
Efficiency Score
WeakARCO struggles to generate sufficient returns from assets.
Valuation Score
ExcellentARCO trades at attractive valuation levels.
Growth Score
WeakARCO faces weak or negative growth trends.
Financial Health Score
WeakARCO carries high financial risk with limited liquidity.
Profitability Score
ModerateARCO maintains healthy but balanced margins.
Key Financial Metrics
Is ARCO Expensive or Cheap?
P/E Ratio
ARCO trades at 7.65 times earnings. This suggests potential undervaluation.
PEG Ratio
When adjusting for growth, ARCO's PEG of 0.09 indicates potential undervaluation.
Price to Book
The market values Arcos Dorados Holdings Inc. at 2.52 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at -0.00 times EBITDA. This is generally considered low.
How Well Does ARCO Make Money?
Net Profit Margin
For every $100 in sales, Arcos Dorados Holdings Inc. keeps $5.39 as profit after all expenses.
Operating Margin
Core operations generate 7.85 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $41.79 in profit for every $100 of shareholder equity.
ROA
Arcos Dorados Holdings Inc. generates $6.88 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Arcos Dorados Holdings Inc. generates limited operating cash flow of $270.97M, signaling weaker underlying cash strength.
Free Cash Flow
Arcos Dorados Holdings Inc. generates weak or negative free cash flow of $2.58M, restricting financial flexibility.
FCF Per Share
Each share generates $0.01 in free cash annually.
FCF Yield
ARCO converts 0.14% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
7.65
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.09
vs 25 benchmark
P/B Ratio
Price to book value ratio
2.52
vs 25 benchmark
P/S Ratio
Price to sales ratio
0.41
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
2.77
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.89
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.42
vs 25 benchmark
ROA
Return on assets percentage
0.07
vs 25 benchmark
ROCE
Return on capital employed
0.13
vs 25 benchmark
How ARCO Stacks Against Its Sector Peers
| Metric | ARCO Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 7.65 | 25.25 | Better (Cheaper) |
| ROE | 41.79% | 1170.00% | Weak |
| Net Margin | 5.39% | 742.00% | Weak |
| Debt/Equity | 2.77 | 0.77 | Weak (High Leverage) |
| Current Ratio | 0.89 | 9.19 | Weak Liquidity |
| ROA | 6.88% | -6467.00% (disorted) | Weak |
ARCO outperforms its industry in 1 out of 6 key metrics, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Arcos Dorados Holdings Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
48.42%
Industry Style: Cyclical, Growth, Discretionary
High GrowthEPS CAGR
82.92%
Industry Style: Cyclical, Growth, Discretionary
High GrowthFCF CAGR
17.31%
Industry Style: Cyclical, Growth, Discretionary
High Growth