Arcos Dorados Holdings Inc (ARCO)
NYSE:ARCO
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Arcos Dorados Holdings
(NYSE:ARCO)
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Rating:60Neutral
Price Target:
$9.50
â–˛(6.03% 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
Digital & loyalty adoption
A 62% digital mix and a 27.2M-member loyalty program are durable demand levers: digital lowers service costs, raises average check via targeted offers, and builds repeat purchase visibility. These structural shifts improve unit economics, customer retention, and allow more efficient marketing and menu personalization over time.
Negative Factors
High leverage & weak free cash flow
Material leverage combined with volatile, near‑zero free cash flow constrains strategic flexibility. High debt amplifies operating shocks, limits ability to self-fund openings or weather country-specific downturns, increases refinancing exposure, and raises the importance of sustained cash conversion to support dividends and capex.
Read all positive and negative factors
Positive Factors
Negative Factors
Digital & loyalty adoption
A 62% digital mix and a 27.2M-member loyalty program are durable demand levers: digital lowers service costs, raises average check via targeted offers, and builds repeat purchase visibility. These structural shifts improve unit economics, customer retention, and allow more efficient marketing and menu personalization over time.
Read all positive factors
Arcos Dorados Holdings (ARCO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.85B
Dividend Yield3.27%
Average Volume (3M)901.16K
Price to Earnings (P/E)7.3
Beta (1Y)0.44
Revenue Growth4.66%
EPS Growth42.60%
CountryUS
Employees100,000
SectorConsumer Cyclical
Sector Strength84
IndustryRestaurants
Share Statistics
EPS (TTM)0.12
Shares Outstanding130,663,060
10 Day Avg. Volume745,987
30 Day Avg. Volume901,157
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 Cap2.00
Enterprise Value/Revenue0.79
Enterprise Value/Gross Profit6.44
Enterprise Value/Ebitda6.46
Forecast
1Y Price Target
$10.89Price Target Upside21.51% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
EPS Forecast (FY)0.69
Revenue Forecast (FY)$5.23B
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
8.96
Price Trends
8.28
Positive
7.89
Positive
7.41
Positive
Market Momentum
0.18
Negative
67.16
Neutral
79.43
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 8.96 is above the 20-day moving average (MA) of 8.32, above the 50-day MA of 8.28, and above the 200-day MA of 7.41, indicating a bullish trend. The MACD of 0.18 indicates Negative momentum. The RSI at 67.16 is Neutral, neither overbought nor oversold. The STOCH value of 79.43 is Neutral, 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 | $203.75B | 25.46 | -336.89% | 2.31% | 3.72% | 4.85% | |
67 Neutral | $43.73B | 24.92 | -22.93% | 1.84% | 9.65% | 23.32% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
60 Neutral | $1.85B | 7.29 | 32.50% | 3.27% | 4.66% | 42.60% | |
59 Neutral | $11.24B | 22.18 | -15.04% | 1.63% | 5.17% | -0.62% | |
57 Neutral | $1.28B | 9.79 | 140.58% | 8.15% | -3.10% | -10.24% | |
48 Neutral | $1.17B | 42.31 | -6.99% | 4.72% | -0.27% | -64.64% |
* Consumer Cyclical Sector Average
ARCO
Arcos Dorados Holdings
8.78
1.24
16.43%
DPZ
Domino's Pizza
337.77
-132.11
-28.12%
MCD
McDonald's
286.64
-21.94
-7.11%
PZZA
Papa John's International
35.50
1.66
4.89%
WEN
Wendy's
6.70
-5.08
-43.13%
YUM
Yum! Brands
158.36
14.55
10.12%
Arcos Dorados Holdings Corporate Events
Arcos Dorados Shareholders Approve 2025 Results and Board Slate at 2026 AGM
Apr 14, 2026
Arcos Dorados Holdings announced that at its Annual General Shareholders’ Meeting held in Montevideo on April 10, 2026, investors approved all proposals, including the company’s financial statements for the fiscal year ended December 3...
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...
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.