Arcos Dorados Holdings Inc Dossier - Source-backed chat

Arcos Dorados Holdings Inc

ARCONYSE

SectorConsumer Discretionary

IndustryRestaurants

Beta (adjusted)0.66

Intrinsic Value $9.77median of 5 methods · middle span $8-$17based on filings through 31 Dec 2025

Market Price $7.15Price as of 30 Sep 2026

UndervaluedIntrinsic value is 37% above the market price

−50% · IV below pricenear fair value ±15%IV above price · +50%

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Market Cap $1.5B

Enterprise Value $2.3B

Shares Outstanding 210.7M diluted

Moat Rating Wide

Next Earnings Date18 Nov 2026

Last ex-dividend21 Sep 2026

All prices and values are periodic snapshots, not live quotes. Source dates are shown for reference.

Thesis

Street consensus, scenarios, merits, risks, and invalidation triggers

AI-assisted

Thesis Summary

Arcos Dorados Holdings Inc. (ARCO) is the world's largest independent McDonald's franchisee, operating a dominant quick-service restaurant footprint across Latin America and the Caribbean. The company has demonstrated robust operational execution, highlighted by record first-quarter 2026 revenues of $1.2 billion and 16% systemwide comparable sales growth driven by digital transformation and loyalty initiatives. However, structural challenges—including persistent foreign exchange volatility in key markets like Brazil and Argentina, low-margin profiles, and high macroeconomic exposure—justify a Hold rating. While valuation multiples remain cheap relative to global peers, the stock's upside is constrained by currency translation headwinds and the need for continuous capital reinvestment to support its expansion and modernization goals.

This section is the 12-month view: analyst targets and the probability-weighted scenarios built from them. The intrinsic value at the top of this page answers a different question: what the business is worth today.

Street view · analyst 12-month targets9 analysts · as of 18 Aug 2026

Low · most bearish analyst$9.15

Mean target$11.29

High · most bullish analyst$14.00

Our research · scenarios, merits, risks, and invalidation triggersResearch as of 18 Sep 2026

Scenarios · 12-month scenario targetsAnchored at research date

Base CaseCentral scenario

The company successfully executes its 2026 expansion plan, opening between 105 and 115 new restaurants while keeping capital expenditures within the guided range of $275 million to $325 million. Digital channels continue to contribute over 60% of systemwide sales, and the loyalty program drives visit frequency. However, gains are partially offset by currency devaluations in Brazil and Argentina, leading to stable but moderate earnings growth in USD terms.

Scenarios are anchored to street consensus at the research date, with our probabilities and rationale.

Key Investment Merits

Dominant market leadership as the exclusive operator of McDonald's in 21 Latin American and Caribbean countries and territories.
Strong digital momentum, with digital channels representing 64% of systemwide sales and loyalty program membership exceeding 30 million.
Proven operational execution, delivering record first-quarter 2026 Adjusted EBITDA of $118 million and a 120 basis point margin expansion.

Key Investment Risks

High exposure to foreign exchange risk, where local currency devaluations (especially the Brazilian Real and Argentine Peso) negatively impact USD-translated results.
Macroeconomic and political instability across Latin American territories, which can lead to social unrest, inflation, and consumer spending pressures.
Substantial capital expenditure requirements to maintain, modernize, and expand the restaurant base under the Master Franchise Agreement.

Thesis Invalidation Triggers

Severe macroeconomic deterioration or hyperinflation in Brazil or Argentina that cannot be offset by local menu pricing adjustments.
A significant slowdown in guest traffic or digital engagement that erodes the Adjusted EBITDA margin below historical averages.
Failure to meet the development commitments or operational standards set by the McDonald's Master Franchise Agreement, risking penalties or franchise rights.

All scenarios are estimates and subject to change. Past performance is not indicative of future results.

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Explore this dossier

ValuationIntrinsic value, the six-method breakdown, peer medians, and your assumptions sandbox.Financial SnapshotRevenue, profitability, returns, balance sheet, dividends, and the filing-level detail.Qualitative AnalysisBusiness overview, strategic initiatives, and mergers, acquisitions & partnerships.Outlook & Key DatesForward estimates, reporting calendar, and the monitoring framework.