Arcos Dorados Holdings (NYSE: ARCO) is one of 22 publicly-traded companies in the “Quick Service Restaurants” industry, but how does it compare to its peers? We will compare Arcos Dorados Holdings to similar companies based on the strength of its earnings, valuation, institutional ownership, dividends, analyst recommendations, risk and profitability.

Insider and Institutional Ownership

36.7% of Arcos Dorados Holdings shares are held by institutional investors. Comparatively, 79.8% of shares of all “Quick Service Restaurants” companies are held by institutional investors. 16.3% of shares of all “Quick Service Restaurants” companies are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Arcos Dorados Holdings and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Arcos Dorados Holdings 1.76% 14.68% 3.69%
Arcos Dorados Holdings Competitors 6.90% 12.59% 9.54%

Risk & Volatility

Arcos Dorados Holdings has a beta of 2.15, indicating that its stock price is 115% more volatile than the S&P 500. Comparatively, Arcos Dorados Holdings’ peers have a beta of 0.53, indicating that their average stock price is 47% less volatile than the S&P 500.

Valuation & Earnings

This table compares Arcos Dorados Holdings and its peers top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Arcos Dorados Holdings $3.16 billion $249.87 million 39.42
Arcos Dorados Holdings Competitors $3.06 billion $846.52 million 29.77

Arcos Dorados Holdings has higher revenue, but lower earnings than its peers. Arcos Dorados Holdings is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Analyst Ratings

This is a summary of current ratings and recommmendations for Arcos Dorados Holdings and its peers, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arcos Dorados Holdings 0 0 3 0 3.00
Arcos Dorados Holdings Competitors 328 1474 1690 85 2.43

Arcos Dorados Holdings currently has a consensus target price of $9.53, suggesting a potential downside of 6.99%. As a group, “Quick Service Restaurants” companies have a potential upside of 10.23%. Given Arcos Dorados Holdings’ peers higher possible upside, analysts plainly believe Arcos Dorados Holdings has less favorable growth aspects than its peers.

Summary

Arcos Dorados Holdings peers beat Arcos Dorados Holdings on 7 of the 13 factors compared.

About Arcos Dorados Holdings

Arcos Dorados Holdings Inc. is a McDonald’s franchisee. The Company operates or franchises over 2,140 McDonald’s-branded restaurants. It divides its operations into four geographical divisions: Brazil; the Caribbean division, consisting of Aruba, Colombia, Curacao, French Guiana, Guadeloupe, Martinique, Puerto Rico, Trinidad and Tobago, the United States Virgin Islands of Saint Croix and Saint Thomas, and Venezuela; the North Latin America division (NOLAD), consisting of Costa Rica, Mexico and Panama, and the South Latin America division (SLAD), consisting of Argentina, Chile, Ecuador, Peru and Uruguay. Its menus feature over three tiers of products: entry-level options, such as its Big Pleasures, Small Prices offerings and Almuerzos Colombianos (Colombian Lunches) in Colombia; core menu options, such as the Big Mac, Happy Meal and Quarter Pounder, and premium options, such as Big Tasty or Angus premium hamburgers and chicken sandwiches and low-calorie or low-sodium products.

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