Start here if you're new
what it is
Arcos Dorados runs and franchises McDonald’s restaurants across Latin America and the Caribbean.
how it gets paid
Last year Arcos Dorados Hldgs made $4.5B in revenue. Brazil was the main engine at $2.0B, or 44% of sales.
what just happened
The key takeaway was Q4 EPS of $0.28, which finished well above the prior three 2024 quarters.
At a glance
n/a balance sheet
25/100 earnings predictability — expect surprises
7.0x trailing p/e — the market's not buying it — or you found a deal
3.1% dividend yield — cash in your pocket every quarter
14.1% return on capital — nothing to write home about
xvary composite: 38/100 — weak
What they do
Arcos Dorados runs and franchises McDonald’s restaurants across Latin America and the Caribbean.
This is scale with a side of fries. Arcos has the exclusive right to run McDonald’s in 20 countries and territories, and it operates or franchises more than 2,400 locations. If you want McDonald’s exposure in this region, there is no second door to knock on.
How they make money
$4.5B
annual revenue
Brazil
$2.0B
North Latin America
$1.1B
South Latin America
$0.9B
Caribbean
$0.5B
The products that matter
largest operating region
Brazil
$2.0B · 44% of revenue
Brazil is the largest region on the revenue map above. Growth rates move with local demand and FX—read quarterly filings, not just the McDonald's brand.
core market
broad regional footprint
North Latin America
$1.1B · 24% of revenue
North Latin America diversifies you away from a single-country bet. The dollar figures should match the regional revenue table.
second engine
slower regional exposure
South Latin America
$0.9B · 20% of revenue
this $0.9B region grew 2%. That is the quiet part loud: the McDonald's sign does not cancel weak local demand or messy currency conditions.
drag watch
smaller diversification piece
Caribbean
$0.5B · 11% of revenue
The Caribbean is the smallest slice on the map. It rounds out the footprint but rarely drives the equity story.
~11% of revenue
Key numbers
7.0x
trailing p/e
P/E → price-to-earnings → what you pay for each dollar of profit. At 7.0x, this is priced closer to a problem than a franchise machine.
10.9%
operating margin
Operating margin → profit after running the stores → what the core business keeps before financing and taxes. Double-digit restaurant margins are real, not decorative.
14.1%
return on capital
Return on capital → profit on the money tied up in the business → how efficiently management turns stores and equipment into earnings.
3.1%
dividend yield
Dividend yield → cash paid to shareholders as a percent of stock price → you are getting paid while you wait for rerating.
Financial health
n/a
strength
- balance sheet grade n/a
- risk rank 4 — safer than 20% of stocks
- price stability 45 / 100
- long-term debt $716M (31% of capital)
n/a — functional but not a standout on the balance sheet.
Total return vs. market
Return history isn't available for ARCO right now.
source: institutional data · return history unavailable
What just happened
beat estimates
The key takeaway was Q4 EPS of $0.28, which finished well above the prior three 2024 quarters.
Value Line shows quarterly EPS of $0.14, $0.12, $0.17, and $0.28 in 2024, for full-year EPS of $0.71. That was down from $0.86 in 2023, so the year cooled even as the fourth quarter improved.
$4.5B
revenue (FY)
$0.71
eps (FY)
12.4%
gross margin (FY)
the number that mattered
Full-year EPS landed at $0.71, in line with the 2024 estimate narrative, because the stock at 7.0x earnings depends on profit holding up.
source: company earnings report, 2026
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What could go wrong
the first thing to respect here is translation risk. ARCO can sell more burgers, post better local comps, and still hand you weaker dollar results if major currencies move the wrong way.
med
currency and inflation volatility
100% of revenue is earned in Latin American currencies and then translated into U.S. dollars. If a major market devalues 10%, reported dollar revenue from that market falls 10% even if restaurant traffic holds up.
this is the main reason the stock stays cheap. It changes how clean the quarter looks and how durable the earnings multiple feels.
med
thin restaurant margins
ARCO runs at a 5.4% net margin on $4.56B in revenue. That leaves less room than the McDonald's brand might suggest for wage inflation, food costs, rent, and promotional pressure.
if costs rise faster than menu pricing, 6.6x earnings stops looking cheap and starts looking accurate.
med
single-brand dependence
The franchise is exclusive and perpetual, which is a real asset. It also means the whole business rides on one brand, one royalty structure, and one operating framework set by McDonald's.
you own the territory. You do not control the terms of the brand that makes the territory valuable.
100% of ARCO's revenue is exposed to Latin American consumer demand and local currencies, while only 5.4% of revenue shows up as net profit. That is a narrow cushion.
source: institutional data · regulatory filings · risk analysis
Pay attention to
earnings
Q4 and full-year 2025 earnings report
Scheduled for March 19, 2026. Consensus expects $1.22B in revenue and $0.20 in EPS. Watch margin first, then top line. With a 5.4% net margin, that order matters.
trend
Brazil keeping its lead
Brazil is 40% of revenue and grew 8% last year versus 2% in South Latin America. If that gap closes the wrong way, the group growth story cools fast.
metric
reported dollars versus local comps
Management said Q1 2026 comparable sales growth should top Q4 2025. You need reported dollars to confirm it. Local strength without translation support still leaves the stock stuck.
risk
cost pressure on a thin margin
A 5.4% net margin does not leave much room for wage, food, or occupancy surprises. If pricing power slips for even one quarter, EPS feels it fast.
Analyst rankings
earnings predictability
25 / 100
earnings are harder to forecast here than in most stocks. in human-speak, expect revisions, translation noise, and the occasional quarter where the reported numbers feel better or worse than the restaurants probably felt on the ground.
source: institutional data
Institutional activity
institutional ownership data for ARCO is being compiled.
source: institutional data
Price targets
3-5 year target range
n/a
n/a
$8
current price
n/a
target midpoint · n/a from current
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