Analyzing Arcos Dorados (ARCO) and Chanticleer (BURG)

Arcos Dorados (NYSE:ARCO) and Chanticleer (NASDAQ:BURG) are both small-cap retail/wholesale companies, but which is the better business? We will compare the two companies based on the strength of their valuation, institutional ownership, analyst recommendations, dividends, earnings, profitability and risk.

Analyst Recommendations

This is a summary of current ratings and target prices for Arcos Dorados and Chanticleer, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arcos Dorados 0 0 1 0 3.00
Chanticleer 0 0 0 0 N/A

Arcos Dorados currently has a consensus price target of $12.00, indicating a potential upside of 81.27%. Given Arcos Dorados’ higher probable upside, analysts clearly believe Arcos Dorados is more favorable than Chanticleer.

Insider & Institutional Ownership

35.7% of Arcos Dorados shares are held by institutional investors. Comparatively, 4.2% of Chanticleer shares are held by institutional investors. 18.8% of Chanticleer shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Volatility and Risk

Arcos Dorados has a beta of 1.65, indicating that its share price is 65% more volatile than the S&P 500. Comparatively, Chanticleer has a beta of 2.29, indicating that its share price is 129% more volatile than the S&P 500.

Profitability

This table compares Arcos Dorados and Chanticleer’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Arcos Dorados 2.82% 21.03% 5.69%
Chanticleer -15.34% -35.65% -12.83%

Valuation and Earnings

This table compares Arcos Dorados and Chanticleer’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Arcos Dorados $3.32 billion 0.42 $129.16 million $0.61 10.85
Chanticleer $41.43 million 0.21 -$6.79 million ($1.78) -1.33

Arcos Dorados has higher revenue and earnings than Chanticleer. Chanticleer is trading at a lower price-to-earnings ratio than Arcos Dorados, indicating that it is currently the more affordable of the two stocks.

Dividends

Arcos Dorados pays an annual dividend of $0.10 per share and has a dividend yield of 1.5%. Chanticleer does not pay a dividend. Arcos Dorados pays out 16.4% of its earnings in the form of a dividend.

Summary

Arcos Dorados beats Chanticleer on 12 of the 15 factors compared between the two stocks.

Arcos Dorados Company Profile

Arcos Dorados Holdings Inc. operates as a franchisee of McDonald's restaurants. It has the exclusive right to own, operate, and grant franchises of McDonald's restaurants in 20 countries and territories in Latin America and the Caribbean, including Argentina, Aruba, Brazil, Chile, Colombia, Costa Rica, Curaçao, Ecuador, French Guiana, Guadeloupe, Martinique, Mexico, Panama, Peru, Puerto Rico, Trinidad and Tobago, Uruguay, the United States Virgin Islands of St. Croix and St. Thomas, and Venezuela. As of April 27, 2018, the company operated or franchised approximately 2,100 McDonald's-branded restaurants. Arcos Dorados Holdings Inc. was founded in 2007 and is based in Montevideo, Uruguay.

Chanticleer Company Profile

Chanticleer Holdings, Inc., together with its subsidiaries, owns, operates, and franchises fast casual dining concepts in the United States and internationally. The company owns and operates 8 locations under the American Burger Company name in North Carolina, South Carolina, and New York; 8 company-owned locations in the United States and 13 franchisee-operated locations in the United States and the Middle East under The Burger Joint name; and 12 company-owned locations under the Little Big Burger name in the Portland, Oregon and Charlotte, North Carolina, as well as in Wallingford, Seattle. It also owns and operates 6 company-owned locations under the Just Fresh name in Charlotte, North Carolina; and 8 full service restaurants under the Hooters name in the United States, South Africa, and the United Kingdom. The company was formerly known as Tulvine Systems, Inc. and changed its name to Chanticleer Holdings, Inc. in May 2005. Chanticleer Holdings, Inc. was founded in 1999 and is based in Charlotte, North Carolina.

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