Arcos Dorados Holdings Inc. (ARCO) AI Stock Analysis

Arcos Dorados Holdings Inc., based in Montevideo, Uruguay, operates as the largest franchisee of McDonald's restaurants across Latin America and the Caribbean. Established in 2007, it holds exclusive rights to own, operate, and grant franchises for McDonald's establishments across 20 countries and territories. The company focuses on delivering dining experiences aligned with McDonald's standards of quality, service, and innovation. Through its footprint, Arcos Dorados expands its restaurant portfolio, serves urban centers and local communities, and tailors its offerings to regional consumer tastes.

Arcos Dorados generated a 5-year revenue compound annual growth rate of 18.7% between FY2020 and FY2025. Annual revenue expanded from $2.66B in FY2021 to $4.68B in FY2025, with growth slowing to 4.7% in FY2025 following a 3.2% rise in FY2024. Operating margin stood at 7.5% in FY2025 compared to 5.2% in FY2021, while net income increased to $212.1M from $45.5M over the same period. For the trailing twelve months, revenue reached $4.98B with a net profit margin of 5.2%. In the latest quarter ended June 30, 2026, quarterly revenue increased 14.3% year-over-year, and quarterly earnings grew 99.3%.

As of June 30, 2026, Arcos Dorados held $270.0M in cash and short-term investments against $2.20B in total debt, yielding net debt of $1.93B. Shareholders' equity was $831.1M, resulting in a debt-to-equity ratio of 2.65 and a current ratio of 0.88. Operating cash flow in FY2025 was $296.3M, supporting $281.4M in capital expenditures and yielding free cash flow of $15.0M. During FY2025, the company distributed $50.6M in dividends.

Arcos Dorados holds a market capitalization of $1.67B and an enterprise value of $3.56B. The stock trades at a trailing P/E of 6.5x and an EV/EBITDA of 5.9x, which are both lower than the median of its US-listed Consumer Cyclical peers at 18.0x and 11.1x, respectively. Its forward P/E is 14.5x compared to the peer median of 14.1x. Over the past year, the stock returned 16.4%, slightly trailing the S&P 500's return of 16.8%, but outperformed the index over five years with an 89.6% gain compared to 83.0% for the benchmark.

Arcos Dorados pays a quarterly dividend with a forward annual payout of $0.28 per share, representing a dividend yield of 3.52%. Its payout ratio stands at 21.9%. The company has paid dividends for 5 consecutive years, achieving an annualized 5-year dividend growth rate of 16.9%. The last ex-dividend date listed is December 23, 2026.

Wall Street coverage includes 4 Strong Buy, 4 Buy, and 1 Hold ratings. The mean price target is $11.23, representing a 41.2% upside from the last closing price of $7.95. For the current fiscal year ending December 31, 2026, consensus estimates project revenue of $5.27B and EPS of $0.80, indicating an EPS decline of 22.9%. The company exceeded EPS expectations in 3 of the last 4 quarters, and its next earnings report is scheduled for November 11, 2026.

This page is an AI-written research summary of Arcos Dorados Holdings Inc. (ARCO). The text was generated on October 30, 2026 from Quotelinks data as of October 16, 2026 (company profile, annual results, latest balance sheet, valuation, price performance and analyst estimates). An automatic check rejects any draft that contains a figure not found in that data. It is not investment advice; verify figures on the linked tabs before making decisions.

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