Popeyes Louisiana Kitchen (NASDAQ: PLKI) and Arcos Dorados (NYSE:ARCO) are both cyclical consumer goods & services companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, risk, dividends, institutional ownership, analyst recommendations, profitability and earnings.
Institutional & Insider Ownership
97.6% of Popeyes Louisiana Kitchen shares are held by institutional investors. Comparatively, 36.6% of Arcos Dorados shares are held by institutional investors. 2.2% of Popeyes Louisiana Kitchen shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
This table compares Popeyes Louisiana Kitchen and Arcos Dorados’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Popeyes Louisiana Kitchen||15.08%||490.51%||15.48%|
This is a summary of current ratings and recommmendations for Popeyes Louisiana Kitchen and Arcos Dorados, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Popeyes Louisiana Kitchen||1||4||1||0||2.00|
Popeyes Louisiana Kitchen presently has a consensus target price of $69.75, suggesting a potential downside of 11.71%. Arcos Dorados has a consensus target price of $10.87, suggesting a potential upside of 12.03%. Given Arcos Dorados’ stronger consensus rating and higher probable upside, analysts plainly believe Arcos Dorados is more favorable than Popeyes Louisiana Kitchen.
Valuation and Earnings
This table compares Popeyes Louisiana Kitchen and Arcos Dorados’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Popeyes Louisiana Kitchen||N/A||N/A||N/A||$1.98||39.90|
|Arcos Dorados||$2.93 billion||0.70||$78.81 million||$0.38||25.53|
Arcos Dorados has higher revenue and earnings than Popeyes Louisiana Kitchen. Arcos Dorados is trading at a lower price-to-earnings ratio than Popeyes Louisiana Kitchen, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Popeyes Louisiana Kitchen has a beta of 0.24, suggesting that its share price is 76% less volatile than the S&P 500. Comparatively, Arcos Dorados has a beta of 2.04, suggesting that its share price is 104% more volatile than the S&P 500.
Popeyes Louisiana Kitchen beats Arcos Dorados on 7 of the 12 factors compared between the two stocks.
Popeyes Louisiana Kitchen Company Profile
Popeyes Louisiana Kitchen, Inc. (Popeyes) develops, operates and franchises quick-service restaurants (QSRs) under the trade names Popeyes Louisiana Kitchen and Popeyes Chicken & Biscuits. The Company conducts its operations through two segments: franchise operations and Company-operated restaurants. The Company-operated restaurant segment includes the operation of Company-owned restaurants. The franchise operations segment consists of domestic and international franchising activities. The Company’s Louisiana style menu features spicy chicken, chicken tenders, fried shrimp and other seafood, red beans and rice, and other regional items. As of December 25, 2016, the Company operated and franchised 2,688 Popeyes restaurants in 48 states, the District of Columbia, three territories and 25 foreign countries. As of December 25, 2016, of the 55 Company-operated restaurants, approximately 84% were concentrated in Louisiana, North Carolina and Tennessee.
Arcos Dorados Company Profile
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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