Arcos Dorados Holdings (ARCO) AI Stock Analysis

• Market Cap: $1.83B
• Dividend Yield: 3.27%
• Average Volume (3M): 1.40M
• Price to Earnings (P/E): 7.5
• Beta (1Y): 0.32
• 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: 2,209,420
• 30 Day Avg. Volume: 1,398,980
• 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: 2.04
• Enterprise Value/Revenue: 0.82
• Enterprise Value/Gross Profit: 6.62
• Enterprise Value/Ebitda: 6.53
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): 0.69
• Revenue Forecast (FY): $5.16B

• Rating: 71 Outperform
• Price Target: $9.00 ▲(13.78% Upside)
• Action: Reiterated Date: 11/13/25
• Date: Action: Reiterated 11/13/25

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 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, including Argentina, Aruba, Brazil, Chile, Colombia, Costa Rica, Curacao, Ecuador, French Guiana, Guadeloupe, Martinique, Mexico, Panama, Peru, Puerto Rico, Trinidad and Tobago, Uruguay, the U.S. Virgin Islands of St. Croix and St. Thomas, and Venezuela. As of December 31, 2021, it operated or franchised 2,261 restaurants. The company was founded in 2007 and is based in Montevideo, Uruguay.

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: 7.91
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• 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 7.91 is below the 20-day moving average (MA) of 8.48, above the 50-day MA of 7.90, and above the 200-day MA of 7.32, indicating a bullish trend. The MACD of 0.25 indicates Negative momentum. The RSI at 62.11 is Neutral, neither overbought nor oversold. The STOCH value of 77.72 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
MCD	75 Outperform	$237.18B	27.86	―	2.31%	1.26%	2.87%
YUM	74 Outperform	$45.87B	29.91	―	1.84%	11.60%	-4.33%
ARCO	71 Outperform	$1.83B	7.46	39.04%	3.27%	1.21%	67.88%
DPZ	67 Neutral	$13.93B	23.57	―	1.63%	3.92%	4.98%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
PZZA	57 Neutral	$1.13B	30.46	―	4.72%	-0.64%	-60.71%
WEN	57 Neutral	$1.47B	9.09	87.63%	8.15%	-0.21%	0.16%

Arcos Dorados Holdings Corporate Events

Arcos Dorados Taps Brazilian Debt to Cut Cost of Sustainability-Linked Notes

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 to manage interest rate and currency risk, the company effectively reduced the new borrowing’s estimated U.S. dollar cost to 2.53% and plans to use the proceeds to fund a tender offer of up to $150 million of its 6.125% Sustainability-Linked Senior Notes due 2029. If the tender offer, announced on January 30, 2026, is fully accepted, Arcos Dorados expects to cut the average U.S. dollar cost of its long-term debt by about 55 basis points without materially changing debt maturity, foreign currency exposure or net leverage, reinforcing its strategy to support growth of the McDonald’s brand across its 21 markets while maintaining an efficient, sustainability-linked funding profile.

The most recent analyst rating on (ARCO) stock is a Buy with a $9.00 price target. To see the full list of analyst forecasts on Arcos Dorados Holdings stock, see the ARCO Stock Forecast page.

Arcos Dorados B.V. Launches Tender Offer for Up to US$150 Million of 2029 Notes

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 2029, out of a total of US$350 million outstanding. The offer, which runs until March 2, 2026, provides an incentive for early participation by paying US$1,030 per US$1,000 principal amount to noteholders who tender by February 12, 2026, including a US$30 early tender payment, and US$1,000 per US$1,000 thereafter, with tenders subject to proration if they exceed the maximum amount. The transaction, which is not contingent on a minimum tender, is designed to actively manage the company’s debt profile while leaving any untendered notes outstanding with unchanged rights under the existing indenture, and it underscores Arcos Dorados’ ongoing balance-sheet management in support of its Latin American restaurant operations.

The most recent analyst rating on (ARCO) stock is a Hold with a $8.00 price target. To see the full list of analyst forecasts on Arcos Dorados Holdings stock, see the ARCO Stock Forecast page.

Arcos Dorados Sets 2026 Restaurant Expansion and Capex Targets After 102 Openings in 2025

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 its Latin American and Caribbean footprint in 2026. The company also indicated that 2025 capital expenditures would come in toward the low end of its prior US$300 million to US$350 million range and projected total capex of US$275 million to US$325 million for 2026 to fund new openings, restaurant modernizations, operational optimizations and IT investments, all to be financed with operating cash flow and existing cash, underscoring its strategy of disciplined, returns-focused expansion in its core markets.

The most recent analyst rating on (ARCO) stock is a Hold with a $8.00 price target. To see the full list of analyst forecasts on Arcos Dorados Holdings stock, see the ARCO Stock Forecast page.

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.

The most recent analyst rating on (ARCO) stock is a Hold with a $8.70 price target. To see the full list of analyst forecasts on Arcos Dorados Holdings stock, see the ARCO Stock Forecast page.

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.

The most recent analyst rating on (ARCO) stock is a Hold with a $8.70 price target. To see the full list of analyst forecasts on Arcos Dorados Holdings stock, see the ARCO Stock Forecast page.