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Arcos Dorados (ARCO)
NYSE:ARCO
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Arcos Dorados Holdings
(NYSE:ARCO)
Select Model
Select Model
Rating:71Outperform
Price Target:
$8.50
▲(7.46% 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 (ARCO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.61B
Dividend Yield3.27%
Average Volume (3M)824.93K
Price to Earnings (P/E)6.6
Beta (1Y)0.31
Revenue Growth1.21%
EPS Growth67.88%
CountryUS
Employees100,000
SectorConsumer Cyclical
Sector Strength84
IndustryRestaurants
Share Statistics
EPS (TTM)0.71
Shares Outstanding130,663,060
10 Day Avg. Volume951,658
30 Day Avg. Volume824,935
Financial Highlights & Ratios
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 Cap0.00
Enterprise Value/Revenue0.00
Enterprise Value/Gross Profit0.00
Enterprise Value/Ebitda0.00
Forecast
1Y Price Target
$8.60Price Target Upside8.72% Upside
Rating ConsensusHold
Number of Analyst Covering2
EPS Forecast (FY)0.68
Revenue Forecast (FY)$5.01B
Arcos Dorados Holdings Business Overview & Revenue Model
Company DescriptionArcos 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 MoneyArcos 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 Earnings Call Summary
Earnings Call Date:Nov 12, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Mar 18, 2026
Earnings Call Sentiment Neutral
The earnings call reflected a generally positive outlook with record-breaking revenue, strong comparable sales, and digital growth demonstrating operational strength. However, challenges persisted with declines in adjusted EBITDA due to input cost pressures, particularly in Brazil. The positive impact of a federal tax credit provided some relief, but the underlying cost issues indicated ongoing challenges.Q3-2025 Updates
Positive Updates
Record-Breaking Revenue
Total revenue reached $1.2 billion in the third quarter, marking a new high for a single quarter with balanced US dollar growth across all divisions.
Strong Comparable Sales
System-wide comparable sales rose 12.7%, with particularly strong performance in SLAD, especially Argentina, and selected NOLAD markets such as Mexico.
Digital and Loyalty Program Growth
Digital channel sales rose more than 11% compared to the previous year, generating 61% of system-wide sales, with the loyalty program growing by nearly 50% to 23.6 million members.
Successful New Restaurant Openings
Opened 22 new restaurants in the quarter, contributing to the goal of 90 to 100 openings for the year.
Brand Strength and Market Share
Marketing efforts strengthened brand connection, helped protect or expand market share, and supported performance across markets.
Improved Digital Sales in Brazil
Digital sales in Brazil accounted for nearly 72% of system-wide sales, demonstrating notable strength in delivery and self-order kiosks.
Positive Tax Credit Impact
The company benefited from an $85.6 million net federal tax credit in Brazil, expected to positively impact cash flows.
Negative Updates
Decline in Adjusted EBITDA
Excluding the impact of the federal tax credit, US dollar adjusted EBITDA declined by about 3% due to continued food and paper cost pressures.
Challenges in Brazil
Brazil faced consumer and macroeconomic challenges, with guest volumes slightly down and elevated food and paper costs affecting margins.
Input Cost Pressures
The third quarter saw elevated food and paper costs, especially in Brazil, with beef prices increasing by 35% year over year.
Continued Pressure in NOLAD
NOLAD's margin was pressured due to food and paper costs, occupancy expenses, and G&A, despite improved payroll and lower royalties.
Company Guidance
In the third quarter of 2025, Arcos Dorados Holdings Inc. reported a record total revenue of $1.2 billion, with system-wide comparable sales increasing by 12.7%, aligning with the blended inflation rate for the period. Despite challenges such as consumer dynamics in key markets like Brazil and sustained input cost pressure, the company achieved an adjusted EBITDA of over $200 million. This figure reflects the net benefit of a federal tax credit in Brazil, which amounted to $125.2 million, including $39.6 million in interest. Excluding this tax impact and the prior year's social contribution recovery, adjusted EBITDA in US dollars declined by about 3%, primarily due to elevated food and paper costs. The company opened 22 new restaurants during the quarter, with more than half of the capital expenditures directed towards new restaurant growth, keeping Arcos Dorados on track to meet its annual guidance of 90 to 100 new openings. Digital sales continued to grow, increasing by over 11% compared to the previous year and accounting for 61% of system-wide sales, driven by robust performances in delivery and self-order kiosks. The loyalty program also expanded, reaching 23.6 million members, a nearly 50% increase from 2024, contributing to sustainable top-line 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.72
Positive
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.65
Positive
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.58
Neutral
| 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
Positive
7.91
Price Trends
7.34
Positive
7.11
Positive
7.20
Positive
Market Momentum
0.14
Negative
55.78
Neutral
65.28
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 above the 20-day moving average (MA) of 7.47, above the 50-day MA of 7.34, and above the 200-day MA of 7.20, indicating a bullish trend. The MACD of 0.14 indicates Negative momentum. The RSI at 55.78 is Neutral, neither overbought nor oversold. The STOCH value of 65.28 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 |
|---|---|---|---|---|---|---|---|
71 Outperform | $1.61B | 6.56 | 39.04% | 3.27% | 1.21% | 67.88% | |
68 Neutral | $13.77B | 23.81 | ― | 1.63% | 3.92% | 4.98% | |
65 Neutral | $219.44B | 26.28 | ― | 2.31% | 1.26% | 2.87% | |
65 Neutral | $1.61B | 8.99 | 100.85% | 8.15% | -0.21% | 0.16% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
59 Neutral | $43.63B | 30.60 | ― | 1.84% | 11.60% | -4.33% | |
57 Neutral | $1.23B | 33.14 | ― | 4.72% | -0.64% | -60.71% |
* Consumer Cyclical Sector Average
ARCO
Arcos Dorados Holdings
7.64
0.72
10.37%
DPZ
Domino's Pizza
407.38
-13.26
-3.15%
MCD
McDonald's
308.13
33.58
12.23%
PZZA
Papa John's International
37.58
2.75
7.90%
WEN
Wendy's
8.48
-5.29
-38.41%
YUM
Yum! Brands
157.13
34.19
27.81%
Arcos Dorados Holdings Corporate Events
Arcos Dorados Reports Strong Financial Growth for Nine-Month Period Ending September 2025
Nov 12, 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
Nov 12, 2025
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.
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.