Arcos Dorados Holdings (ARCO) AI Stock Analysis

• Market Cap: $1.53B
• Dividend Yield: 3.29%
• Average Volume (3M): 1.28M
• Price to Earnings (P/E): 6.2
• Beta (1Y): 0.34
• Revenue Growth: 1.21%
• EPS Growth: 67.88%
• Country: US
• Employees: 100,000
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Restaurants
• EPS (TTM): 0.71
• Shares Outstanding: 130,663,060
• 10 Day Avg. Volume: 1,417,782
• 30 Day Avg. Volume: 1,282,633
• PEG Ratio: -0.59
• Price to Book (P/B): 3.02
• Price to Sales (P/S): 0.34
• P/FCF Ratio: -25.23
• Enterprise Value/Market Cap: 2.12
• Enterprise Value/Revenue: 0.71
• Enterprise Value/Gross Profit: 5.72
• Enterprise Value/Ebitda: 5.65
• 1Y Price Target: $8.37
• Price Target Upside: 14.81% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): 0.56
• Revenue Forecast (FY): $4.70B

• Rating: 71 Outperform
• Price Target: $8.50 ▲(16.60% Upside)

Arcos Dorados Holdings demonstrates strong revenue growth and operational efficiency, supported by positive technical indicators and a reasonable valuation. The earnings call provided a positive outlook with record revenue and digital growth, although challenges with input costs and profitability margins remain. High leverage and cash flow management issues are risks that need addressing.

Positive Factors

Digital Sales Growth

The significant increase in digital sales indicates strong adaptation to consumer trends, enhancing customer engagement and operational efficiency.

Market Expansion

Continued expansion through new restaurant openings supports long-term growth and strengthens market presence in key regions.

Loyalty Program Growth

The expansion of the loyalty program enhances customer retention and repeat business, contributing to sustainable revenue growth.

Negative Factors

High Leverage

Significant leverage can limit financial flexibility and increase risk, potentially impacting long-term financial stability.

Input Cost Pressures

Rising input costs can compress margins and affect profitability, posing a challenge to maintaining cost efficiency.

Decline in Adjusted EBITDA

A decline in adjusted EBITDA indicates challenges in maintaining profitability amidst rising costs, affecting financial performance.

Arcos Dorados Holdings Business Overview & Revenue Model

Company Description

Arcos Dorados Holdings (ARCO) is the largest quick-service restaurant (QSR) chain in Latin America and the Caribbean, operating primarily under the McDonald's brand. The company is engaged in the food and beverage sector, focusing on providing a diverse menu that includes hamburgers, chicken products, salads, beverages, and breakfast items. Arcos Dorados operates thousands of restaurants across numerous countries, emphasizing quality service and local adaptation of its products to suit regional tastes.

How the Company Makes Money

Arcos Dorados generates revenue primarily through the sale of food and beverages at its restaurants. The company operates on a franchise model, which allows it to earn royalties from franchisees based on their sales. Additionally, company-owned locations contribute directly to revenue through in-store sales. Arcos Dorados also benefits from partnerships with suppliers and food manufacturers, ensuring a consistent supply of ingredients while negotiating favorable pricing. Seasonal promotions, limited-time offers, and value meals further drive customer traffic and boost sales. The company capitalizes on marketing campaigns to enhance brand visibility and attract a diverse customer base, contributing to overall revenue growth.

Arcos Dorados Holdings Financial Statement Overview

Summary

Arcos Dorados Holdings shows strong revenue growth and operational efficiency, but faces challenges in profitability margins and cash flow management. High leverage poses a risk, although the company effectively generates returns on equity.

Income Statement

Arcos Dorados Holdings has shown consistent revenue growth, with a notable increase of 31.5% in TTM. However, the gross profit margin has decreased slightly from 13.18% in 2024 to 12.53% in TTM, indicating some pressure on cost management. The net profit margin has also declined from 3.33% to 2.89% in TTM, reflecting challenges in maintaining profitability. Despite these pressures, the company maintains a stable EBIT and EBITDA margin, suggesting operational efficiency.

Balance Sheet

The company has a high debt-to-equity ratio of 3.49 in TTM, indicating significant leverage, which poses a risk in terms of financial stability. However, the return on equity remains strong at 24.60%, showcasing effective use of equity to generate profits. The equity ratio is relatively low, suggesting a heavy reliance on debt financing.

Cash Flow

Arcos Dorados Holdings faces challenges in cash flow management, with a significant decline in free cash flow growth by -114% in TTM. The operating cash flow to net income ratio is 0.32, indicating moderate cash generation relative to net income. The negative free cash flow to net income ratio highlights potential liquidity concerns.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	4.56B	4.47B	4.33B	3.62B	2.66B	1.98B
Gross Profit	564.31M	586.42M	597.14M	492.61M	324.06M	115.44M
EBITDA	571.61M	502.88M	464.44M	384.24M	247.73M	28.39M
Net Income	245.35M	148.76M	181.27M	140.34M	45.49M	-149.45M
Balance Sheet
Total Assets	3.57B	2.89B	3.02B	2.64B	2.36B	2.29B
Cash, Cash Equivalents and Short-Term Investments	256.87M	138.59M	246.77M	304.40M	278.83M	165.99M
Total Debt	2.06B	1.72B	1.69B	1.56B	1.53B	1.61B
Total Liabilities	2.82B	2.38B	2.50B	2.31B	2.14B	2.10B
Stockholders Equity	744.80M	508.08M	515.28M	323.62M	220.43M	197.55M
Cash Flow
Free Cash Flow	2.58M	-60.79M	21.87M	128.32M	143.04M	-70.34M
Operating Cash Flow	270.97M	266.85M	381.96M	345.44M	258.04M	15.97M
Investing Cash Flow	-355.05M	-280.33M	-380.35M	-259.65M	-108.28M	-88.71M
Financing Cash Flow	164.73M	-37.16M	-11.82M	-59.98M	-17.93M	126.01M

Arcos Dorados Holdings Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 7.29
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARCO, the sentiment is Positive. The current price of 7.29 is above the 20-day moving average (MA) of 7.24, above the 50-day MA of 7.01, and below the 200-day MA of 7.34, indicating a neutral trend. The MACD of 0.07 indicates Positive momentum. The RSI at 52.89 is Neutral, neither overbought nor oversold. The STOCH value of 33.34 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ARCO.

Arcos Dorados Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ARCO	71 Outperform	$1.53B	6.22	39.04%	3.29%	1.21%	67.88%
MCD	65 Neutral	$217.14B	26.00	―	2.28%	1.26%	2.87%
WEN	63 Neutral	$1.60B	8.90	100.85%	8.70%	-0.21%	0.16%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
YUM	60 Neutral	$41.10B	28.82	―	1.88%	11.60%	-4.33%
DPZ	58 Neutral	$13.67B	23.65	―	1.67%	3.92%	4.98%
PZZA	56 Neutral	$1.35B	36.25	―	4.48%	-0.64%	-60.71%

Arcos Dorados Holdings Corporate Events

Arcos Dorados Reports Strong Financial Growth for Nine-Month Period Ending September 2025

Arcos Dorados Holdings Inc. reported its unaudited financial results for the nine-month period ending September 30, 2025. The company experienced an increase in total revenues, reaching $3.41 billion compared to $3.33 billion in the same period of 2024. Operating income rose to $254.79 million from $221.59 million, and net income attributable to the company was $186.95 million, up from $90.36 million the previous year. This financial performance highlights the company’s robust operational efficiency and market presence in the fast-food industry.

Arcos Dorados Reports Strong Q3 2025 Financial Results with Digital Growth

On November 12, 2025, Arcos Dorados Holdings Inc. reported its financial results for the third quarter of 2025, highlighting a revenue increase to $1.2 billion, driven by a 12.7% rise in systemwide comparable sales. The company emphasized its digital strategy, which accounted for 61% of systemwide sales, and opened 22 new restaurants during the quarter. The results also included a significant net benefit from a federal tax credit in Brazil. Arcos Dorados aims to maintain its market leadership by focusing on digital growth, operational efficiency, and expanding its loyalty program, which reached 23.6 million members by the end of the quarter.

Arcos Dorados Secures $200 Million Credit Facility to Bolster Growth

On October 6, 2025, Arcos Dorados Holdings Inc. announced the establishment of a new $200 million syndicated revolving credit facility (RCF), replacing its previous $75 million facilities. This four-year RCF, with an optional one-year extension, underscores the company’s strategic financial management and strong relationships with banking partners. The facility, arranged by a syndicate of seven banks including JPMorgan Chase and Banco Santander, remains undrawn and is intended to support Arcos Dorados’ sustainable growth and strategic initiatives.