# Arcos Dorados Holdings (ARCO.US)

Canonical: https://gigainvestors.com/s/ARCO

Analysis as of: 2026-10-16T07:26:34.227Z. Financial observations: FY2006–FY2026.

Listing currency: USD. Reporting currency: USD.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed (profit record: pass; earnings resilience is evidence only). Published buy qualification: no.

Share price: $8.06 per share; close as of 2026-10-15.

Estimated value: low $12.13 per share, central $15.45 per share, high $17.92 per share. Buy at or below the central value $15.45 per share. Valuation as of 2026-10-16T07:26:34.227Z; scenarios are not confidence intervals.

Expected annual return: 17.0% at the stated quote. About 17.0% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; US 10-year bond 5.1% + 4 points).

## Checklist

### understandable: fail

- 3 revenue declines in the last 10 years (informational)

- operating margin variation exceeds 0.35

- Financial history: 10 years

- Years with declining revenue: 3

- Years with a net loss: 1

- Operating margin variation: 0.58×

Chart: Operating margin; fiscal year observations.

- FY2017: 0.08×

- FY2018: 0.04×

- FY2019: 0.05×

- FY2020: -0.03×

- FY2021: 0.05×

- FY2022: 0.07×

- FY2023: 0.07×

- FY2024: 0.07×

- FY2025: 0.07×

- LTM to Jun 2026: 0.08×

### moat: fail

- ROIC median below threshold

- ROIC worst years below threshold (more than 1 bad year allowed)

- ROIC, median of available years: 10.0%

- ROIC, second-lowest year: 5.8%

- Typical minus recent gross margin: 0.5 pp

- Typical gross margin (annual median): 12.8%

- Recent gross margin (lower of latest and 3-year median): 12.3%

- Years with nonpositive capital: 0

- Capital spending / revenue: 6.0%

- ROIC including acquisitions, ten-year median: 5.7%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2016: 15.9%

- FY2017: 24.4%

- FY2018: 9.8%

- FY2019: 5.8%

- FY2020: -3.2%

- FY2021: 6.2%

- FY2022: 10.9%

- FY2023: 10.6%

- FY2024: 10.2%

- FY2025: 8.8%

### economics: pass

- Owner earnings / net income, 5-yr: 0.91×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: $660M

- Net income, five-year total: $728M

- Return on incremental invested capital: 19.1%

- Working capital / revenue, annual change: -0.0 pp

- Working capital / revenue, change between three-year averages: -0.0 pp

- Working capital / revenue, final three-year average: -2.3%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2021: 1.12×

- FY2022: 1.00×

- FY2023: 1.00×

- FY2024: 0.51×

- FY2025: 1.00×

### management: pass

- Historical market-dollar context (not the management verdict): 2016 to 2025 (9 years)

- buybacks unrelated to price (informational)

- ROIC first 3 years vs last 3 years: 15.9% vs 10.2%

- Per-share earnings: 0.36 to 0.86 (three-year endpoint medians)

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: -0.3%

- Ordinary dilution, 5-year annual growth: 0.0%

- Market cap gain: $344M

- Cumulative retained earnings: $554M

- Diluted shares, 10-year annual growth: -0.3%

- Diluted shares, 5-year annual growth: 0.0%

- $1 test, starting fiscal year: FY2016

- $1 test, ending fiscal year: FY2025

- Per-share value growth: 11.4%

- Per-share value change: $0.50

- Per-share value, starting three-year median: $0.36

- Per-share value, ending three-year median: $0.86

- Buybacks concentrated in cheaper years (correlation): -0.80

- Average buyback yield: 1.1%

- Buyback history: 4 years

- Debt-funded buybacks: No

- Acquisition spending: $122M

- Cumulative net income, 10 years: $903M

- ROIC, first three-year median: 15.9%

- ROIC, last three-year median: 10.2%

Chart: Earnings per share; fiscal year observations.

- FY2016: $0.36

- FY2017: $0.60

- FY2018: $0.17

- FY2019: $0.38

- FY2020: -$0.71

- FY2021: $0.22

- FY2022: $0.67

- FY2023: $0.86

- FY2024: $0.71

- FY2025: $1.01

### accounting: pass

- latest-year receivables to sales index (DSRI) exceeds 1.465

- Sloan accruals: -2.2%

- Receivables to sales index (DSRI): 1.47×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 1.5%

- Earnings backed by cash: Yes

- Operating cash / earnings: 1.40×

- Accounting red flags: 1

- Goodwill and intangibles / equity: 0.19×

Chart: Sloan accruals; fiscal year observations.

- FY2016: -5.7%

- FY2017: -7.0%

- FY2018: -9.1%

- FY2019: -5.6%

- FY2020: -7.2%

- FY2021: -9.0%

- FY2022: -7.8%

- FY2023: -6.6%

- FY2024: -4.1%

- FY2025: -2.2%

## Holders

- [Sarah Ketterer](https://gigainvestors.com/CAU): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [David Hoeft](https://gigainvestors.com/DAC): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Richard Pzena](https://gigainvestors.com/PIM): tracked 13F investor; follow the investor page for holding quarter and amounts.

## Price story

Down 36% since Dec 2023 · "ARCO Q4 Deep Dive: Revenue Growth Offsets Margin Pressure as Cost Controls Tighten" (finance.yahoo.com, Mar 2026) · sales +6.5%

Story as of 2026-10-16T09:58:19.346Z; price observation 2026-10-15.

Price needs cash profits to shrink 4.8% a year for ten years

- 2025-06-04: ARCO Q1 Earnings Call: Flat Sales and Margin Pressure Amid Challenging Consumer Environment ([finance.yahoo.com](https://finance.yahoo.com/news/arco-q1-earnings-call-flat-130538692.html))

- 2025-08-13: McDonald's Franchisee Arcos Dorados Sees Growth Driven By Digital Sales Despite Brazil Margin Pressures ([finance.yahoo.com](https://finance.yahoo.com/news/mcdonalds-franchisee-arcos-dorados-sees-141523664.html))

- 2025-11-13: ARCO Q3 Deep Dive: Profitability Surges Despite Softer Sales, Margin Focus Ahead ([finance.yahoo.com](https://finance.yahoo.com/news/arco-q3-deep-dive-profitability-053858325.html))

### Sales · FY2025–2026

sales +6.5%; source https://www.sec.gov/Archives/edgar/data/1508478/000162828026028950/arco-20251231.htm; observed 2026-04-30.

- FY2017: $3.3B 

- FY2018: $3.1B 

- FY2019: $3.0B 

- FY2020: $2.0B 

- FY2021: $2.7B 

- FY2022: $3.6B 

- FY2023: $4.3B 

- FY2024: $4.5B 

- FY2025: $4.7B 

- FY2026: $5.0B 

### Gross margin · FY2025

gross margin 12.3%; source https://www.sec.gov/Archives/edgar/data/1508478/000162828026028950/arco-20251231.htm; observed 2026-04-30.

- FY2016: 12.2% 

- FY2017: 13.5% 

- FY2018: 13.4% 

- FY2019: 12.4% 

- FY2020: 5.8% 

- FY2021: 12.2% 

- FY2022: 13.6% 

- FY2023: 13.8% 

- FY2024: 13.1% 

- FY2025: 12.3% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in restaurants; annual sales are USD 4.7 billion.

- Source: https://www.sec.gov/Archives/edgar/data/1508478/000162828026028950/arco-20251231.htm (filed 2026-04-30); FY2025: revenue 4678259000; grossProfit 574118000; margin = grossProfit / revenue.

### Why customers stay

Margins ranged from 12.3% to 13.8% during 2023–25; it earns 10% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-30); FY2023: grossProfit / revenue = 13.8%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-30); FY2024: grossProfit / revenue = 13.1%.

- Source: https://www.sec.gov/Archives/edgar/data/1508478/000162828026028950/arco-20251231.htm (filed 2026-04-30); FY2025: grossProfit / revenue = 12.3%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-30); 10-year return on capital observations [[2016,0.1592827699012553],[2017,0.2435013368553287],[2018,0.09788955058564636],[2019,0.05778009468577352],[2020,-0.03232873067718142],[2021,0.06183564289060247],[2022,0.1092231414832293],[2023,0.10575860566593513],[2024,0.10158514625803],[2025,0.08833071202862597]]; median 0.09973734842183818. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Can it raise prices

Kept about a 14% gross margin through 2022 cost inflation.

- Source: https://www.sec.gov/Archives/edgar/data/1508478/000162828026028950/arco-20251231.htm (filed 2026-04-30); Gross margin observations: [[2021,0.12182939396024198],[2022,0.13612001651329603],[2023,0.13784898836024467]]; range within 2 percentage points.

### Where the cash goes

Spends 39.6% of cash earnings on expansion; earns 19.1% on new investment.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-30); FY2016: growth capex 0; upkeep 92282000; owner earnings 79497000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-30); FY2017: growth capex 75384000; upkeep 99382000; owner earnings 129166000. Growth capex / owner earnings = 0.5836210767539446.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-30); FY2021: growth capex 0; upkeep 114999000; owner earnings 50881000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-30); FY2022: growth capex 97338000; upkeep 119777000; owner earnings 140343000. Growth capex / owner earnings = 0.6935721767384194.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-30); FY2023: growth capex 210829000; upkeep 149268000; owner earnings 181274000. Growth capex / owner earnings = 1.1630404801571101.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-30); FY2024: growth capex 76810022.54647583; upkeep 250825977.45352417; owner earnings 75287022.54647583. Growth capex / owner earnings = 1.0202292499887324.

- Source: https://www.sec.gov/Archives/edgar/data/1508478/000162828026028950/arco-20251231.htm (filed 2026-04-30); FY2025: growth capex 84093000; upkeep 197257000; owner earnings 212116000. Growth capex / owner earnings = 0.3964481698693168.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-30); Incremental return on capital 0.1905369800846455, from the economics test's unchanged annual inputs.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-30); Dividend observations: [[2016,0],[2017,20937000],[2018,20937000],[2019,22425000],[2020,10220000],[2021,21000],[2022,31587000],[2023,40022000],[2024,50557000],[2025,50560000]]. Zero only counted when supported by a complete cash-flow statement.

### Are managers owners

Insiders own 0.5% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-15); ARCO.US SharesStats.PercentInsiders = 0.483 percentage points; cache date 2026-10-15.

### What the price says

The price assumes cash profits shrink 4.8% yearly over ten years.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-04-30); Ten-year compound average after fade. Initial solved rate -0.08018931782363753. Price 8.06; FX 1; discount 0.1; same standard ten-year fade to terminal 0.03. FY2015 owner earnings/share -0.1473331734397319 → FY2025 1.0070645878040907. Closing-price date 2026-10-15.

## Monthly share-price history (USD per share)

- 2016-10: $6.32 per share

- 2016-11: $6.06 per share

- 2016-12: $5.55 per share

- 2017-01: $5.96 per share

- 2017-02: $6.37 per share

- 2017-03: $8.27 per share

- 2017-04: $8.43 per share

- 2017-05: $8.84 per share

- 2017-06: $7.66 per share

- 2017-07: $9.04 per share

- 2017-08: $8.84 per share

- 2017-09: $10.33 per share

- 2017-10: $10.28 per share

- 2017-11: $10.23 per share

- 2017-12: $10.64 per share

- 2018-01: $10.54 per share

- 2018-02: $9.82 per share

- 2018-03: $9.40 per share

- 2018-04: $9.35 per share

- 2018-05: $7.61 per share

- 2018-06: $7.14 per share

- 2018-07: $7.19 per share

- 2018-08: $6.94 per share

- 2018-09: $6.42 per share

- 2018-10: $7.41 per share

- 2018-11: $8.48 per share

- 2018-12: $8.12 per share

- 2019-01: $9.43 per share

- 2019-02: $8.52 per share

- 2019-03: $7.37 per share

- 2019-04: $7.17 per share

- 2019-05: $6.68 per share

- 2019-06: $7.48 per share

- 2019-07: $8.17 per share

- 2019-08: $6.79 per share

- 2019-09: $6.91 per share

- 2019-10: $7.68 per share

- 2019-11: $7.91 per share

- 2019-12: $8.33 per share

- 2020-01: $7.88 per share

- 2020-02: $6.62 per share

- 2020-03: $3.43 per share

- 2020-04: $3.92 per share

- 2020-05: $3.99 per share

- 2020-06: $4.31 per share

- 2020-07: $4.72 per share

- 2020-08: $4.51 per share

- 2020-09: $4.16 per share

- 2020-10: $4.08 per share

- 2020-11: $5.00 per share

- 2020-12: $5.10 per share

- 2021-01: $5.01 per share

- 2021-02: $5.35 per share

- 2021-03: $5.16 per share

- 2021-04: $5.81 per share

- 2021-05: $6.56 per share

- 2021-06: $6.06 per share

- 2021-07: $6.07 per share

- 2021-08: $5.46 per share

- 2021-09: $5.12 per share

- 2021-10: $4.77 per share

- 2021-11: $4.92 per share

- 2021-12: $5.83 per share

- 2022-01: $6.46 per share

- 2022-02: $7.73 per share

- 2022-03: $8.13 per share

- 2022-04: $7.25 per share

- 2022-05: $7.82 per share

- 2022-06: $6.74 per share

- 2022-07: $7.26 per share

- 2022-08: $7.30 per share

- 2022-09: $7.29 per share

- 2022-10: $7.54 per share

- 2022-11: $7.49 per share

- 2022-12: $8.36 per share

- 2023-01: $8.50 per share

- 2023-02: $8.26 per share

- 2023-03: $7.71 per share

- 2023-04: $7.94 per share

- 2023-05: $8.45 per share

- 2023-06: $10.25 per share

- 2023-07: $11.30 per share

- 2023-08: $9.87 per share

- 2023-09: $9.46 per share

- 2023-10: $9.02 per share

- 2023-11: $11.59 per share

- 2023-12: $12.69 per share

- 2024-01: $12.38 per share

- 2024-02: $11.86 per share

- 2024-03: $11.12 per share

- 2024-04: $10.78 per share

- 2024-05: $9.66 per share

- 2024-06: $9.00 per share

- 2024-07: $9.66 per share

- 2024-08: $8.80 per share

- 2024-09: $8.72 per share

- 2024-10: $8.81 per share

- 2024-11: $8.09 per share

- 2024-12: $7.28 per share

- 2025-01: $7.75 per share

- 2025-02: $7.65 per share

- 2025-03: $8.06 per share

- 2025-04: $7.65 per share

- 2025-05: $7.41 per share

- 2025-06: $7.89 per share

- 2025-07: $6.65 per share

- 2025-08: $7.00 per share

- 2025-09: $6.75 per share

- 2025-10: $7.17 per share

- 2025-11: $7.59 per share

- 2025-12: $7.34 per share

- 2026-01: $8.18 per share

- 2026-02: $8.80 per share

- 2026-03: $8.25 per share

- 2026-04: $8.92 per share

- 2026-05: $8.70 per share

- 2026-06: $8.06 per share

- 2026-07: $8.17 per share

- 2026-08: $7.92 per share

- 2026-09: $7.15 per share

- 2026-10: $8.06 per share

## Annual estimated value (USD per share)

- FY2023: low $5.17 per share, central $5.92 per share, high $6.76 per share

- FY2024: low $4.95 per share, central $5.96 per share, high $6.91 per share

- FY2025: low $12.20 per share, central $15.31 per share, high $17.64 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

[Original 20-F filing](https://www.sec.gov/Archives/edgar/data/1508478/000162828026028950/arco-20251231.htm); period 2025-12-31, filed 2026-04-30.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.