Carrols Restaurant Group (NASDAQ: TAST) and Arcos Dorados Holdings (NYSE:ARCO) are both cyclical consumer goods & services companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, analyst recommendations, profitability, dividends, earnings and risk.
Earnings and Valuation
This table compares Carrols Restaurant Group and Arcos Dorados Holdings’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Carrols Restaurant Group||$999.03 million||0.40||$80.24 million||$0.72||15.63|
|Arcos Dorados Holdings||$3.16 billion||0.67||$249.87 million||$0.26||38.46|
Arcos Dorados Holdings has higher revenue and earnings than Carrols Restaurant Group. Carrols Restaurant Group is trading at a lower price-to-earnings ratio than Arcos Dorados Holdings, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
Carrols Restaurant Group has a beta of 0.04, suggesting that its share price is 96% less volatile than the S&P 500. Comparatively, Arcos Dorados Holdings has a beta of 2.15, suggesting that its share price is 115% more volatile than the S&P 500.
This is a breakdown of recent ratings and recommmendations for Carrols Restaurant Group and Arcos Dorados Holdings, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Carrols Restaurant Group||0||0||2||0||3.00|
|Arcos Dorados Holdings||0||0||2||0||3.00|
Carrols Restaurant Group currently has a consensus target price of $15.50, indicating a potential upside of 37.78%. Arcos Dorados Holdings has a consensus target price of $10.30, indicating a potential upside of 3.00%. Given Carrols Restaurant Group’s higher probable upside, equities analysts clearly believe Carrols Restaurant Group is more favorable than Arcos Dorados Holdings.
Institutional and Insider Ownership
86.7% of Carrols Restaurant Group shares are held by institutional investors. Comparatively, 37.1% of Arcos Dorados Holdings shares are held by institutional investors. 5.6% of Carrols Restaurant Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
This table compares Carrols Restaurant Group and Arcos Dorados Holdings’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Carrols Restaurant Group||2.16%||11.97%||4.50%|
|Arcos Dorados Holdings||1.76%||14.68%||3.69%|
About Carrols Restaurant Group
Carrols Restaurant Group, Inc. is a holding company and conducts all of its operations through its subsidiary, Carrols Corporation (Carrols) and Carrols’ subsidiary, Carrols LLC. The Company is a restaurant company and Burger King franchisee in the United States. As of January 1, 2017, the Company had owned and operated 753 Burger King restaurants under the name Burger King in 16 Northeastern, Midwestern and Southeastern states. Burger King restaurants feature the flame-broiled Whopper sandwich, as well as a range of hamburgers, chicken and other specialty sandwiches, French fries, salads, breakfast items, hot dogs, snacks, smoothies, frappes and other offerings. The Company’s Burger King restaurants are located in various states, such as Illinois, Indiana, Kentucky, Maine, Massachusetts, Michigan, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Vermont, Virginia and West Virginia.
About Arcos Dorados Holdings
Arcos Dorados Holdings Inc. is a McDonald’s franchisee. The Company operates or franchises over 2,140 McDonald’s-branded restaurants. It divides its operations into four geographical divisions: Brazil; the Caribbean division, consisting of Aruba, Colombia, Curacao, French Guiana, Guadeloupe, Martinique, Puerto Rico, Trinidad and Tobago, the United States Virgin Islands of Saint Croix and Saint Thomas, and Venezuela; the North Latin America division (NOLAD), consisting of Costa Rica, Mexico and Panama, and the South Latin America division (SLAD), consisting of Argentina, Chile, Ecuador, Peru and Uruguay. Its menus feature over three tiers of products: entry-level options, such as its Big Pleasures, Small Prices offerings and Almuerzos Colombianos (Colombian Lunches) in Colombia; core menu options, such as the Big Mac, Happy Meal and Quarter Pounder, and premium options, such as Big Tasty or Angus premium hamburgers and chicken sandwiches and low-calorie or low-sodium products.
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