Want to see ARCO full AI Analyst Report?
Top Page
Arcos Dorados Holdings
(NYSE:ARCO)
Select Model
Select Model
Rating:66Neutral
Price Target:
$7.50
â–¼(-5.54% Downside)
Action:Downgraded
Date:10/27/26
ARCO scores positively on valuation (low P/E and a meaningful dividend yield) and supportive earnings-call momentum (record results and stated leverage improvement). Offsetting those strengths, the financial profile is still constrained by historically high leverage and uneven free-cash-flow conversion, while the technical setup remains weak with the stock trading below key moving averages.
Positive Factors
McDonald’s Brand and Market Position
The McDonald’s brand gives Arcos Dorados strong regional recognition and a substantial traffic advantage over competitors. A leading market position can support customer acquisition, pricing execution, franchise demand, and resilience as the company expands across Latin America and the Caribbean.
Negative Factors
Elevated Leverage
Although leverage has improved from earlier periods, debt remains high relative to equity and increases the company’s financial sensitivity if restaurant operating conditions weaken. Interest and refinancing obligations can limit flexibility for expansion, shareholder returns, or absorbing regional economic shocks.
Read all positive and negative factors
Positive Factors
Negative Factors
McDonald’s Brand and Market Position
The McDonald’s brand gives Arcos Dorados strong regional recognition and a substantial traffic advantage over competitors. A leading market position can support customer acquisition, pricing execution, franchise demand, and resilience as the company expands across Latin America and the Caribbean.
Read all positive factors
Arcos Dorados Holdings (ARCO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.47B
Dividend Yield3.76%
Average Volume (3M)2.00M
Price to Earnings (P/E)5.8
Beta (1Y)0.58
Revenue Growth10.77%
EPS Growth97.30%
CountryUS
Employees100,000
SectorConsumer Cyclical
Sector Strength84
IndustryRestaurants
Share Statistics
EPS (TTM)1.21
Shares Outstanding128,353,990
10 Day Avg. Volume1,516,915
30 Day Avg. Volume1,998,210
Financial Highlights & Ratios
PEG Ratio0.17
Price to Book (P/B)2.01
Price to Sales (P/S)0.33
P/FCF Ratio103.11
Enterprise Value/Market Cap2.47
Enterprise Value/Revenue0.73
Enterprise Value/Gross Profit5.92
Enterprise Value/Ebitda5.63
Forecast
1Y Price Target
$9.00Price Target Upside13.35% Upside
Rating ConsensusHold
Number of Analyst Covering1
EPS Forecast (FY)0.79
Revenue Forecast (FY)$5.27B
Arcos Dorados Holdings Business Overview & Revenue Model
Company Description
Arcos Dorados Holdings Inc. serves as the premier franchisee for McDonald's, holding exclusive rights to operate, own, and sub-franchise the fast-food chain's eateries. Its extensive domain covers 20 countries and territories throughout Latin Amer...
How the Company Makes Money
Arcos Dorados primarily makes money by selling food and beverages to customers at McDonald’s restaurants it operates in Latin America and the Caribbean. Revenue is generated from in-restaurant transactions and off-premise channels (such as drive-t...
Arcos Dorados Holdings Earnings Call Summary
Earnings Call Date:Aug 13, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 12, 2026
Earnings Call Sentiment Positive
The call conveyed a predominantly positive message: the company delivered record revenue, adjusted EBITDA, net income and EPS growth, meaningful digital and market-share gains, strong Brazil outperformance, improved leverage (1.1x) and successful capital actions (sustainability-linked bond, note repayment). Headwinds remain—consumer pressure in parts of the footprint (Argentina, Mexico), NOLAD comparability and payroll cost pressure, earthquake disruptions, and an aggressive promotional environment—but management framed these as largely manageable and supported by ongoing revenue management, cost discipline, and operational initiatives. Overall the positive operational and financial momentum outweighs the listed challenges.Positive Updates
Record Quarterly Revenue
Total revenue reached $1.3 billion, the highest ever quarterly revenue, up more than 14% year-over-year.
Negative Updates
Challenging Consumer Environment in Several Markets
Consumer spending remained pressured in multiple markets (notably Argentina and Mexico), with SLAD weighted average inflation ~46%-47% and sales in some SLAD markets only in line with or slightly below inflation.
Read all updates
Q2-2026 Updates
Positive
Negative
Record Quarterly Revenue
Total revenue reached $1.3 billion, the highest ever quarterly revenue, up more than 14% year-over-year.
Read all positive updates
Company Guidance
Management said that while conditions will remain dynamic in H2 2026, they expect to maximize full‑year results and strengthen the growth foundation, leveraging Q2 momentum—total revenue of $1.3B (+~14% y/y), adjusted EBITDA of $126.8M (>20% y/y), Brazil EBITDA up ~43% with a 180‑bp margin expansion to 14.6%—and improved cash and leverage (TTM net leverage ~1.1x and sequentially higher adjusted free cash flow). They expect G&A savings to continue through year‑end and further margin support from food & paper improvements, a lower consolidated effective tax rate over time, and continued operational drivers including digital sales +25% y/y (66% of sales), identified sales >28%, loyalty members who visit ~5x more, 16 restaurant openings in Q2 (35 YTD), Q2 CapEx $49.1M (YTD ≈$86M) and ~77% of the portfolio modernized; more detail will be provided at Investor Day on October 1.Arcos Dorados Holdings Financial Statement Overview
Summary
Income Statement
72
Positive
Balance Sheet
55
Neutral
Cash Flow
60
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 4.98B | 4.68B | 4.47B | 4.33B | 3.62B | 2.66B |
| Gross Profit | 613.39M | 574.12M | 586.42M | 597.14M | 492.61M | 324.06M |
| EBITDA | 644.88M | 571.76M | 502.88M | 464.44M | 384.24M | 247.73M |
| Net Income | 256.75M | 212.12M | 148.76M | 181.27M | 140.34M | 45.49M |
Balance Sheet | ||||||
| Total Assets | 3.89B | 3.89B | 2.89B | 3.02B | 2.64B | 2.36B |
| Cash, Cash Equivalents and Short-Term Investments | 269.99M | 422.35M | 138.59M | 246.77M | 304.40M | 278.83M |
| Total Debt | 2.20B | 2.25B | 1.72B | 1.69B | 1.56B | 1.53B |
| Total Liabilities | 3.06B | 3.11B | 2.38B | 2.50B | 2.31B | 2.14B |
| Stockholders Equity | 831.08M | 770.49M | 508.08M | 515.28M | 323.62M | 220.43M |
Cash Flow | ||||||
| Free Cash Flow | 95.41M | 14.99M | -60.79M | 21.87M | 128.32M | 143.04M |
| Operating Cash Flow | 341.25M | 296.34M | 266.85M | 381.96M | 345.44M | 258.04M |
| Investing Cash Flow | -166.05M | -335.03M | -280.33M | -380.35M | -259.65M | -108.28M |
| Financing Cash Flow | -78.79M | 288.75M | -37.16M | -11.82M | -59.98M | -17.93M |
Arcos Dorados Holdings Technical Analysis
Negative
7.94
Price Trends
7.75
Negative
7.97
Negative
8.10
Negative
Market Momentum
-0.04
Positive
34.99
Neutral
26.53
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARCO, the sentiment is Negative. The current price of 7.94 is above the 20-day moving average (MA) of 7.76, above the 50-day MA of 7.75, and below the 200-day MA of 8.10, indicating a bearish trend. The MACD of -0.04 indicates Positive momentum. The RSI at 34.99 is Neutral, neither overbought nor oversold. The STOCH value of 26.53 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 |
|---|---|---|---|---|---|---|---|
68 Neutral | $177.50B | 20.31 | -561.20% | 2.97% | 6.30% | 5.37% | |
68 Neutral | $40.79B | 18.66 | -30.35% | 1.98% | 10.28% | 56.85% | |
68 Neutral | $33.85B | 18.17 | 34.86% | 3.45% | 6.51% | 40.57% | |
66 Neutral | $1.47B | 5.82 | 32.90% | 3.76% | 10.77% | 97.30% | |
64 Neutral | $10.31B | 17.22 | -15.48% | 2.46% | 4.50% | 5.70% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
52 Neutral | $1.18B | 9.38 | 109.00% | 7.92% | -0.98% | -31.26% |
* Consumer Cyclical Sector Average
ARCO
Arcos Dorados Holdings
7.04
-0.25
-3.46%
DPZ
Domino's Pizza
313.32
-88.95
-22.11%
MCD
McDonald's
250.83
-47.89
-16.03%
WEN
Wendy's
6.19
-2.01
-24.56%
YUM
Yum! Brands
149.47
11.07
8.00%
QSR
Restaurant Brands International
74.48
10.09
15.66%
Arcos Dorados Holdings Corporate Events
Arcos Dorados Details Long-Term Growth Plan at 2026 Investor Day
Oct 1, 2026
Arcos Dorados Holdings Inc., Latin America’s largest restaurant chain and the world’s biggest independent McDonald’s franchisee, announced that it hosted its 2026 Investor Day in Montevideo, Uruguay, on October 1, 2026. Senior ma...
Arcos Dorados Posts Strong First-Half 2026 Profit and Revenue Growth
Aug 13, 2026
Arcos Dorados Holdings filed a Form 6-K on August 13, 2026, disclosing unaudited condensed consolidated financial statements for the six months ended June 30, 2026. The report shows total revenues rising to $2.52 billion from $2.22 billion a year ...
Arcos Dorados Sets Record Q2 2026 Revenue on Digital and World Cup Tailwinds
Aug 13, 2026
On August 13, 2026, Arcos Dorados reported that second-quarter 2026 revenues rose 14.3% year over year in U.S. dollars to a record $1.3 billion, driven by a 15.3% increase in systemwide comparable sales and the strongest guest traffic performance ...
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.