Arcos Dorados (ARCO) & Papa Murphy's (FRSH) Head to Head Comparison

Arcos Dorados (NYSE: ARCO) and Papa Murphy's (NASDAQ:FRSH) are both retail/wholesale companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, valuation, analyst recommendations, dividends, risk, institutional ownership and earnings.

Valuation & Earnings

This table compares Arcos Dorados and Papa Murphy's’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Arcos Dorados $2.93 billion 0.69 $78.81 million $0.38 25.13
Papa Murphy's $126.88 million 0.77 $2.64 million ($0.71) -8.08

Arcos Dorados has higher revenue and earnings than Papa Murphy's. Papa Murphy's is trading at a lower price-to-earnings ratio than Arcos Dorados, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Arcos Dorados has a beta of 2.04, indicating that its share price is 104% more volatile than the S&P 500. Comparatively, Papa Murphy's has a beta of 0.14, indicating that its share price is 86% less volatile than the S&P 500.

Profitability

This table compares Arcos Dorados and Papa Murphy's’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Arcos Dorados 2.51% 20.04% 5.19%
Papa Murphy's -9.72% 5.05% 1.83%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Arcos Dorados and Papa Murphy's, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arcos Dorados 0 0 3 0 3.00
Papa Murphy's 0 2 0 0 2.00

Arcos Dorados currently has a consensus target price of $10.87, indicating a potential upside of 13.79%. Papa Murphy's has a consensus target price of $4.75, indicating a potential downside of 17.25%. Given Arcos Dorados’ stronger consensus rating and higher possible upside, research analysts plainly believe Arcos Dorados is more favorable than Papa Murphy's.

Institutional and Insider Ownership

36.6% of Arcos Dorados shares are held by institutional investors. Comparatively, 32.3% of Papa Murphy's shares are held by institutional investors. 3.1% of Papa Murphy's shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Arcos Dorados beats Papa Murphy's on 12 of the 14 factors compared between the two stocks.

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.

Papa Murphy's Company Profile

Papa Murphy’s Holdings, Inc. is a holding company. The Company, together with its subsidiaries, is a franchisor and operator of the Take ‘N’ Bake pizza chain in the United States. The Company franchises the right to operate Take ‘N’ Bake pizza franchises and operates Take ‘N’ Bake pizza stores owned by the Company. The Company operates through three segments: Domestic Company Stores, Domestic Franchise and International. Its Domestic Franchise segment consists of its domestic franchised stores, which represent its system-wide stores and derives its revenues from franchise and development fees and the collection of franchise royalties. The Domestic Company Stores segment consists of its Company-owned stores in the United States and derives its revenues from retail sales of pizza and side items to the general public. Its International segment consists of its stores outside of the United States, all of which are franchised and derives its revenues from franchise and development fees.

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