Arcos Dorados Holdings Inc (ARCO)
NYSE:ARCO
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Arcos Dorados Holdings
(NYSE:ARCO)
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Rating:60Neutral
Price Target:
$9.00
â–˛(5.88% Upside)
Action:DowngradedDate:03/20/26
The score is held back primarily by balance-sheet leverage and weak/volatile free cash flow, alongside bearish technical momentum. These are partially offset by a very low P/E with a solid dividend yield and a generally positive earnings-call outlook on expansion, cost discipline, and margin improvement (tempered by Brazil cost/traffic and tax/FX-related risks).
Positive Factors
Scale & Brand Position
As the master McDonald’s franchisee across 21 markets with ~2,500 restaurants, Arcos Dorados benefits from durable brand leverage, procurement scale, and standardized operating systems. That market position supports steady systemwide revenue, bargaining power with suppliers, and resilience to local shocks over the medium term.
Negative Factors
Elevated Leverage
A debt-to-equity ratio near 2.8x leaves the company with above-average financial leverage for the restaurants sector. This increases interest and refinancing risk across currency cycles, reduces financial flexibility for opportunistic investments, and amplifies earnings volatility during demand slowdowns.
Read all positive and negative factors
Positive Factors
Negative Factors
Scale & Brand Position
As the master McDonald’s franchisee across 21 markets with ~2,500 restaurants, Arcos Dorados benefits from durable brand leverage, procurement scale, and standardized operating systems. That market position supports steady systemwide revenue, bargaining power with suppliers, and resilience to local shocks over the medium term.
Read all positive factors
Arcos Dorados Holdings (ARCO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.79B
Dividend Yield3.27%
Average Volume (3M)1.10M
Price to Earnings (P/E)7.3
Beta (1Y)0.38
Revenue Growth1.21%
EPS Growth67.88%
CountryUS
Employees100,000
SectorConsumer Cyclical
Sector Strength84
IndustryRestaurants
Share Statistics
EPS (TTM)0.12
Shares Outstanding130,663,060
10 Day Avg. Volume653,165
30 Day Avg. Volume1,096,396
Financial Highlights & Ratios
PEG Ratio0.17
Price to Book (P/B)2.01
Price to Sales (P/S)0.33
P/FCF Ratio103.13
Enterprise Value/Market Cap2.05
Enterprise Value/Revenue0.78
Enterprise Value/Gross Profit6.38
Enterprise Value/Ebitda6.41
Forecast
1Y Price Target
$9.64Price Target Upside13.41% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
EPS Forecast (FY)0.7
Revenue Forecast (FY)$5.16B
Arcos Dorados Holdings Business Overview & Revenue Model
Company Description
Arcos Dorados Holdings Inc. operates as a franchisee of McDonald's restaurants. The company has the exclusive right to own, operate, and grant franchises of McDonald's restaurants in 20 countries and territories in Latin America and the Caribbean,...
How the Company Makes Money
Arcos Dorados primarily makes money by operating McDonald’s restaurants and selling food and beverages directly to customers. Revenue is generated at the point of sale across channels such as counter service, drive-thru, takeaway, delivery, and di...
Arcos Dorados Holdings Earnings Call Summary
Earnings Call Date:Mar 19, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 20, 2026
Earnings Call Sentiment Positive
The call highlighted strong top-line and adjusted EBITDA growth, record full-year EBITDA, rapid digital and loyalty adoption, successful restaurant expansion and capital-structure improvements. These positives were tempered by market-specific challenges—most notably subdued consumer traffic and high beef-driven Food & Paper costs in Brazil, some margin pressure in NOLAD, and substantial tax-related one-offs that boost comparability. Management emphasized disciplined cost control, continued investment in digital and restaurant development, and early signs of recovery entering 2026.Positive Updates
Quarterly Revenue Growth
Total revenue of $1.3 billion in Q4 2025, representing 10.7% year-over-year growth.
Negative Updates
Tax and One-Off Items Affect Comparability
Net tax benefits in Brazil materially boosted reported results in 2025 (Q4: $20.5M other operating income + $13.3M interest income; full-year P&L impact $159.0M). Reliance on these discrete items reduces comparability and may overstate recurring profitability.
Read all updates
Q4-2025 Updates
Positive
Negative
Quarterly Revenue Growth
Total revenue of $1.3 billion in Q4 2025, representing 10.7% year-over-year growth.
Read all positive updates
Company Guidance
Management’s 2026 guidance calls for 105–115 restaurant openings and total CapEx of $275–325 million (roughly 85% development / 15% technology), building on 102 openings in 2025 and a 73% modernized portfolio with a stated goal toward 90%+ “Experience of the Future”; they expect to utilize the 2025 Brazil tax credit (total 2025 P&L impact $159.0 million — $106.1M to adjusted EBITDA and $52.9M interest income; Q4 impacts $20.5M other operating income and $13.3M interest) over five years for about a $30.0M annual cash benefit, see a full‑year 2026 effective tax rate roughly in line with 2025’s 37.7%, and anticipate higher gross margins and continued adjusted‑EBITDA margin expansion driven by cost discipline (including >$10M annualized G&A savings), the recent liability management (a $150.0M bank facility with ~2.53% estimated USD cost used to tender $135.0M of 2029 bonds at 6.8%), and ongoing digital/loyalty momentum (62% digital penetration; 27.2M loyalty members); dividends were increased to $0.28 per share (from $0.24).Arcos Dorados Holdings Financial Statement Overview
Summary
Income Statement
72
Positive
Balance Sheet
45
Neutral
Cash Flow
38
Negative
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 4.68B | 4.47B | 4.33B | 3.62B | 2.66B |
| Gross Profit | 574.12M | 586.42M | 597.14M | 492.61M | 324.06M |
| EBITDA | 571.76M | 502.88M | 464.44M | 384.24M | 247.73M |
| Net Income | 212.12M | 148.76M | 181.27M | 140.34M | 45.49M |
Balance Sheet | |||||
| Total Assets | 3.89B | 2.89B | 3.02B | 2.64B | 2.36B |
| Cash, Cash Equivalents and Short-Term Investments | 422.35M | 138.59M | 246.77M | 304.40M | 278.83M |
| Total Debt | 2.25B | 1.72B | 1.69B | 1.56B | 1.53B |
| Total Liabilities | 3.11B | 2.38B | 2.50B | 2.31B | 2.14B |
| Stockholders Equity | 770.49M | 508.08M | 515.28M | 323.62M | 220.43M |
Cash Flow | |||||
| Free Cash Flow | 14.99M | -60.79M | 21.87M | 128.32M | 143.04M |
| Operating Cash Flow | 296.34M | 266.85M | 381.96M | 345.44M | 258.04M |
| Investing Cash Flow | -335.03M | -280.33M | -380.35M | -259.65M | -108.28M |
| Financing Cash Flow | 288.75M | -37.16M | -11.82M | -59.98M | -17.93M |
Arcos Dorados Holdings Technical Analysis
Positive
8.50
Price Trends
8.24
Positive
7.81
Positive
7.38
Positive
Market Momentum
0.10
Negative
59.67
Neutral
86.59
Negative
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 8.5 is above the 20-day moving average (MA) of 8.07, above the 50-day MA of 8.24, and above the 200-day MA of 7.38, indicating a bullish trend. The MACD of 0.10 indicates Negative momentum. The RSI at 59.67 is Neutral, neither overbought nor oversold. The STOCH value of 86.59 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ARCO.
Arcos Dorados Holdings Risk Analysis
Arcos Dorados Holdings disclosed 50 risk factors in its most recent earnings report. Arcos Dorados Holdings reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Arcos Dorados Holdings Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $217.15B | 25.46 | -336.89% | 2.31% | 1.26% | 2.87% | |
67 Neutral | $12.31B | 23.81 | -15.28% | 1.63% | 3.92% | 4.98% | |
65 Neutral | $44.72B | 26.98 | -20.57% | 1.84% | 11.60% | -4.33% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
60 Neutral | $1.79B | 7.29 | 32.50% | 3.27% | 1.21% | 67.88% | |
57 Neutral | $1.31B | 9.79 | 140.58% | 8.15% | -0.21% | 0.16% | |
48 Neutral | $1.17B | 42.31 | -6.99% | 4.72% | -0.64% | -60.71% |
* Consumer Cyclical Sector Average
ARCO
Arcos Dorados Holdings
8.50
1.45
20.60%
DPZ
Domino's Pizza
365.95
-101.99
-21.80%
MCD
McDonald's
305.68
-3.24
-1.05%
PZZA
Papa John's International
35.63
6.01
20.29%
WEN
Wendy's
6.89
-5.55
-44.61%
YUM
Yum! Brands
161.76
18.52
12.93%
Arcos Dorados Holdings Corporate Events
Arcos Dorados Reviews Record 2025 Results and Sets April 10, 2026 Shareholder Meeting
Mar 26, 2026
In a March 26, 2026 letter to shareholders, CEO Luis Raganato reviewed 2025 as a mixed year, noting systemwide comparable sales that kept pace with blended inflation and record Adjusted EBITDA of $575.2 million, supported by strong performance in ...
Arcos Dorados Files 2025 Audited Financials, Auditor Flags Brazilian Tax Risks
Mar 19, 2026
Arcos Dorados Holdings Inc. has filed its Form 6-K for March 2026, disclosing audited consolidated financial statements for the years ended December 31, 2025, 2024 and 2023. The filing includes income, comprehensive income, balance sheet, cash flo...
Arcos Dorados Posts Record 2025 EBITDA on Strong Digital Sales and Network Expansion
Mar 19, 2026
On March 19, 2026, Arcos Dorados reported its fourth-quarter and full-year 2025 results, highlighting total revenue of $1.3 billion for the quarter and $4.7 billion for the year, up 10.7% and 4.7% in U.S. dollars, respectively versus 2024. Systemw...
Arcos Dorados Sets April 10, 2026 Date for Annual Shareholders’ Meeting
Mar 6, 2026
Arcos Dorados Holdings Inc., the world’s largest independent McDonald’s franchisee, operates the biggest quick service restaurant chain in Latin America and the Caribbean. With exclusive rights across 21 countries and territories, it m...
Arcos Dorados Signals Stronger-Than-Expected Q1 2026 Sales Trend
Feb 13, 2026
On February 13, 2026, Arcos Dorados Holdings Inc. moved to counter market speculation about a slowdown by clarifying its expected first-quarter 2026 performance. The company said that, contrary to recent commentary linking macroeconomic pressures ...
Arcos Dorados B.V. Reports Strong Early Take-Up in Tender Offer for 2029 Sustainability-Linked Notes
Feb 13, 2026
On February 12, 2026, Arcos Dorados B.V., a subsidiary of Arcos Dorados Holdings Inc., reported early results for its cash tender offer targeting up to U.S.$150 million of its 6.125% sustainability-linked senior notes due 2029. By the early tender...
Arcos Dorados Taps Brazilian Debt to Cut Cost of Sustainability-Linked Notes
Feb 2, 2026
On February 2, 2026, Arcos Dorados announced a capital structure optimization following a financing move completed in December 2025, when its Brazilian subsidiary secured $150 million in new bank debt maturing in 2029. Using derivative instruments...
Arcos Dorados B.V. Launches Tender Offer for Up to US$150 Million of 2029 Notes
Jan 30, 2026
On January 30, 2026, Arcos Dorados B.V., a subsidiary of Arcos Dorados Holdings Inc., launched a cash tender offer to repurchase up to US$150 million in aggregate principal amount of its outstanding 6.125% sustainability-linked senior notes due 20...
Arcos Dorados Sets 2026 Restaurant Expansion and Capex Targets After 102 Openings in 2025
Jan 28, 2026
On January 28, 2026, Arcos Dorados reported that it opened 102 restaurants in 2025, including 88 free-standing units and 73 company-operated locations, with the bulk of new stores in Brazil, and set guidance to open 105 to 115 restaurants across i...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.