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Fundamental analysis: Arcos Dorados Holdings Inc. (ARCO)

Awarener score: 4.6

Conclusion

The higher the Awarener score, the more bang you get for the buck. It measures how much genuine funds the company generates for the stock price paid (Modest), the business stability (Poor) and growth (Poor), and the company's inclination to return cash to the stockholders (Average).

Note: All scores range from 1 (worst) to 10 (best). Conclusions are updated daily with closing stock prices and new reported quarterly financial statements.

Revenue score: 3.0

  • Business has been shrinking. It's been weak when measured against peer companies.
  • Arcos Dorados Holdings Inc. business varies, ups and downs are rather normal. Risk is sufficient. It looks worse than most rivals.

Margins score: 4.8

  • ARCO profit margins -on goods and services sold- are usually very poor. They stand bottom tier against rival companies.
  • Business profit on sales tends to be sufficient. It's similar to competitors.
  • Profits on sales made -available to repay debt and purchase properties- are usually hardly sufficient. They remain close to average when compared to peers.
  • Earnings -before income taxes and interests on loans taken- tend to be hardly sufficient in relation to total revenues. They're still slightly worse than similar companies.
  • Profits -before income taxes- are usually hardly sufficient considering total sales, and remain below average when measured against rivals.
  • Total net profit tends to be hardly sufficient when confronted to sales. Company stands below average when measured against comparable firms.

Growth score: 3.1

  • Arcos Dorados Holdings Inc. profit -on goods and services sold- has been growing at a very good pace. It's been excellent in relation to competitors.
  • In recent years, the firm hasn't always been able to profit from operations, which has been bottom tier against comparable firms.
  • Profits -available to repay debt and purchase properties- have been growing at an excellent pace, which compares more than average in relation to peer enterprises.
  • In the previous years, the firm couldn't always make a profit -before income taxes and interests on loans taken-. It turns to be a disappointment compared to similar stocks.
  • In past years, at least once the company lost money -before income taxes-. It was bottom tier against rivals.
  • In the previous years, the firm had at least a total net loss, and last-in-rank when measured against peer companies.
  • The company lost money at least once in the past years. It's been a disappointment compared to industry peers.

Miscellaneous score: 2.0

  • ARCO had to pay too much income taxes in relation to profits made in the past years. It's been worse than most peers.
  • The company does not report R&D expenses. It's meaningless to measure in relation to competitors.
  • We have insufficient data to estimate how effective is research and development effort. It stands unknown against rival companies.

Profitability score: 6.5

  • Arcos Dorados Holdings Inc. usually gets very good returns on the resources it controls. It proves similar to peer firms.
  • The company normally gets sufficient proceeds -on the resources directly invested in the business-. They remain rather normal in relation to similar companies.
  • Profitability -in relation to owned resources- is usually modest. It ranks below average when measured against competitors.
  • In the past, got good returns -on the tangible resources it controls-. This metric is usually related to the industry in which operates and combines profitability versus reinvestment needs. It's similar to comparable enterprises.

Usage of Funds score: 4.0

  • ARCO usually uses almost all genuine funds generated to buy or replace property, plant, or equipment. The need for reinvestments is huge. It stands similar to rival firms.
  • The company is usually investing in new property, plant, and equipment, to improve its operating capabilities, which is great when measured against industry peers.
  • In the past twelve months it paid low dividends, considering the current stock price. It came mediocre against competitors.
  • In recent years, has greatly cut back dividend payments. It could be enduring difficult times. The company has behaved a disappointment compared to similar firms.
  • The company generates very few genuine funds. Dividend payments are usually on borrowed money, which isn't sustainable in the long run. Unless business prospects improve greatly, future payments could be at risk. Sustainability looks bottom tier against comparable companies.
  • The company usually reduces the pool of investors, resulting in fewer mouths feeding on the pie of profits. It remains a slight improvement compared to peer enterprises.
  • Repurchase effectiveness metric is very complex. Run again in analytical mode if you're interested in a technical explanation. It stands in a weak position compared to rivals.
  • We do not have sufficient data to comment on buybacks and their sustainability. It still looks dubious against competitors.

Balance Sheet score: 5.6

  • Arcos Dorados Holdings Inc. intangible assets (like brands and goodwill) represent a modest portion of resources controlled, according to accounting books. There could be some difficulties in liquidating them if the company ever gets in financial distress. It happens to be similar to peer companies.
  • The company has somewhat lower short-term resources than short-term obligations. Unless it's part of the business model, there might some liquidity concerns. It turns to be lacking compared to similar firms.
  • Most resources controlled were provided for with financial debt. Creditors have more claims on the company than shareholders. Unless the company is a financial institution that takes deposits, the situation might be very risky. It remains slightly worse than rival firms.
  • Controlled resources might be turned into cash and equivalents neither fast nor too slow. Liquidity and risk might be run-of-the-mill. It looks more than average in relation to rivals.
  • For every dollar of short-term obligations, the company has less than a dollar of cash and short-term receivables. It's lacking compared to peer firms.
  • For every dollar of short-term obligations, the company has roughly half of cash and equivalents, which is slightly worse than similar enterprises.
  • Usually, sales are on less than a month credit. It still ranks almost average when measured against peers.
  • Normally has approximately only a couple of weekly sales worth in inventory. It comes up as close to average when compared to competitors.
  • On average, it takes close to one month from the purchase to charging customers. It happens to be slightly better than peers.
  • On average pays suppliers after a month and a half from the purchase. It ranks great when measured against industry peers.
  • The company charges its customers before it must pay its suppliers, so the more it sales, the more free funds it gets. It's excellent in relation to similar companies.
  • Net interest expenses consume a significant portion of usual business earnings, but are mostly bearable. It stands mediocre against rival firms.
  • Business earnings have usually been very low when measured against loans taken. Even significantly cutting back reinvesting in the business, it could take more than ten years to repay the obligations with current profitability. It ranks almost average when measured against comparable enterprises.
  • Revenues are low in relation to property, plant, and equipment required to operate. This metric is likely dependent on the industry the company operates in. The more property, plant, and equipment used, the more the company must reinvest to fight obsolescence, which usually means less available funds for the shareholders in the long run. It looks rather normal in relation to similar firms.
  • Resource exploitation is excellent when yearly sales are considered. This metric is normally tied to the industry where the firm belongs. It's still well ranked against peer companies.

Valuation score: 4.6

  • Arcos Dorados Holdings Inc. looks very expensive in relation to profits and financial position. It happens to be below average when measured against competitors.
  • Price-to-Tangible-Book-Value is a fairly complex metric. Run again in analytical mode if you're interested in a technical explanation. It remains lacking compared to peers.
  • In the past twelve months, the company neither generated nor consumed funds. Whatever funds it could get, it reinvested in the business, which stands mediocre against similar companies.
  • In the past years the company hardly generated enough genuine funds to cover up for its business needs. Business prospects should improve enough to be in a better position to reward investors. It's still substantially worse when measured against industry firms.
  • In the past twelve months, the company hasn't rewarded investors, considering both dividends and share on the pie of earnings. It came up rather normal in relation to peer ventures.
  • The company is drowned in loans. It almost belongs more to the creditors than the stockholders. The situation may be dire. It looks mediocre against similar enterprises.
  • Considering the past twelve months, traditional Price-to-Earnings relation is somewhat high. Improvement expectations are already in the stock price, which presents some risks. It ranks similar to peer companies.
  • Comparing the current stock price with the past twelve-months revenues gives a low relationship. One common cause includes profitability being poor. It looks in good shape compared to rival firms.
  • The relation between the stock price and accounting book value is really high, which may be good or bad depending on context. Run again in analytic mode if you want to dig deeper. The company remains mediocre against peer firms.
  • In the past twelve months, the operating business earned little money when compared to the current stock price and financial position. It happens to be similar to industry peers.
  • In an alternate metric of bang for the buck, the company has usually shown a modest earnings power ability when measured against the current stock price and financial position. It's still rather normal in relation to peer companies.

Total score: 4.2


ARCO logos

Company at a glance: Arcos Dorados Holdings Inc. (ARCO)

Sector, industry: Consumer Cyclical, Restaurants

Market Cap: 1.64 billions

Revenues TTM: 2.89 billions

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.

Awarener score: 4.6

Conclusion

The higher the Awarener score, the more bang you get for the buck. It measures how much genuine funds the company generates for the stock price paid (Modest), the business stability (Poor) and growth (Poor), and the company's inclination to return cash to the stockholders (Average).