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Arcos Dorados Holdings
(NYSE:ARCO)
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Rating:70Outperform
Price Target:
$9.00
â–²(13.35% Upside)
Action:Upgraded
Date:10/06/26
ARCO scores well overall due to improving operating performance and a very attractive valuation (low P/E plus a solid dividend). The main offset is balance-sheet and cash-flow quality risk—leverage remains high in the financial statements and free cash flow has been volatile—while technicals are only moderately supportive with mixed momentum signals.
Positive Factors
Revenue and profit growth
Strong revenue, EBITDA and net-income growth indicates improving operating leverage and customer demand across the franchise system. Continued sales expansion gives Arcos Dorados greater capacity to fund restaurant investment, absorb cost pressures and strengthen earnings over the next several quarters.
Negative Factors
Elevated leverage
Debt remains high relative to the equity base, which limits financial flexibility if restaurant performance weakens or investment needs rise. Although leverage has improved, interest and refinancing obligations can constrain capital allocation and amplify the effect of operating volatility.
Read all positive and negative factors
Positive Factors
Negative Factors
Revenue and profit growth
Strong revenue, EBITDA and net-income growth indicates improving operating leverage and customer demand across the franchise system. Continued sales expansion gives Arcos Dorados greater capacity to fund restaurant investment, absorb cost pressures and strengthen earnings over the next several quarters.
Read all positive factors
Arcos Dorados Holdings (ARCO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.70B
Dividend Yield3.27%
Average Volume (3M)1.97M
Price to Earnings (P/E)6.7
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. Volume2,107,747
30 Day Avg. Volume1,969,248
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 Cap2.14
Enterprise Value/Revenue0.73
Enterprise Value/Gross Profit5.92
Enterprise Value/Ebitda5.63
Forecast
1Y Price Target
$11.50Price Target Upside44.84% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
EPS Forecast (FY)0.79
Revenue Forecast (FY)$5.28B
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
Positive
7.94
Price Trends
7.78
Positive
8.00
Positive
8.10
Negative
Market Momentum
0.10
Negative
57.19
Neutral
71.63
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARCO, the sentiment is Positive. The current price of 7.94 is above the 20-day moving average (MA) of 7.69, above the 50-day MA of 7.78, and below the 200-day MA of 8.10, indicating a neutral trend. The MACD of 0.10 indicates Negative momentum. The RSI at 57.19 is Neutral, neither overbought nor oversold. The STOCH value of 71.63 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 |
|---|---|---|---|---|---|---|---|
70 Outperform | $1.70B | 6.69 | 32.90% | 3.27% | 10.77% | 97.30% | |
68 Neutral | $174.26B | 19.94 | -561.20% | 3.02% | 6.30% | 5.37% | |
68 Neutral | $41.27B | 18.88 | -30.35% | 1.96% | 10.28% | 56.85% | |
68 Neutral | $34.14B | 18.09 | 34.86% | 3.47% | 6.51% | 40.57% | |
64 Neutral | $10.41B | 17.10 | -15.48% | 2.48% | 4.50% | 5.70% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
52 Neutral | $1.24B | 9.52 | 109.00% | 7.80% | -0.98% | -31.26% |
* Consumer Cyclical Sector Average
ARCO
Arcos Dorados Holdings
8.09
1.12
16.00%
DPZ
Domino's Pizza
311.15
-101.68
-24.63%
MCD
McDonald's
246.25
-53.02
-17.72%
WEN
Wendy's
6.28
-2.20
-25.92%
YUM
Yum! Brands
151.24
7.66
5.33%
QSR
Restaurant Brands International
74.15
9.06
13.92%
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.