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

Analyst Recommendations

This is a summary of current ratings and price targets for Arcos Dorados and Popeyes Louisiana Kitchen, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arcos Dorados 0 0 3 0 3.00
Popeyes Louisiana Kitchen 1 4 1 0 2.00

Arcos Dorados currently has a consensus price target of $10.87, indicating a potential upside of 10.32%. Popeyes Louisiana Kitchen has a consensus price target of $69.75, indicating a potential downside of 11.71%. Given Arcos Dorados’ stronger consensus rating and higher possible upside, analysts clearly believe Arcos Dorados is more favorable than Popeyes Louisiana Kitchen.

Risk and Volatility

Arcos Dorados has a beta of 2.05, suggesting that its stock price is 105% more volatile than the S&P 500. Comparatively, Popeyes Louisiana Kitchen has a beta of 0.24, suggesting that its stock price is 76% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Arcos Dorados 2.51% 20.04% 5.19%
Popeyes Louisiana Kitchen 15.08% 490.51% 15.48%

Institutional and Insider Ownership

36.7% of Arcos Dorados shares are owned by institutional investors. Comparatively, 97.6% of Popeyes Louisiana Kitchen shares are owned by institutional investors. 2.2% of Popeyes Louisiana Kitchen shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Arcos Dorados and Popeyes Louisiana Kitchen’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Arcos Dorados $2.93 billion 0.71 $78.81 million $0.38 25.92
Popeyes Louisiana Kitchen N/A N/A N/A $1.98 39.90

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

Summary

Popeyes Louisiana Kitchen beats Arcos Dorados on 6 of the 11 factors compared between the two stocks.

About Arcos Dorados

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.

About Popeyes Louisiana Kitchen

Popeyes Louisiana Kitchen, Inc. (Popeyes) develops, operates and franchises quick-service restaurants (QSRs) under the trade names Popeyes Louisiana Kitchen and Popeyes Chicken & Biscuits. The Company conducts its operations through two segments: franchise operations and Company-operated restaurants. The Company-operated restaurant segment includes the operation of Company-owned restaurants. The franchise operations segment consists of domestic and international franchising activities. The Company’s Louisiana style menu features spicy chicken, chicken tenders, fried shrimp and other seafood, red beans and rice, and other regional items. As of December 25, 2016, the Company operated and franchised 2,688 Popeyes restaurants in 48 states, the District of Columbia, three territories and 25 foreign countries. As of December 25, 2016, of the 55 Company-operated restaurants, approximately 84% were concentrated in Louisiana, North Carolina and Tennessee.

Receive News & Ratings for Arcos Dorados Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Arcos Dorados and related companies with MarketBeat.com's FREE daily email newsletter.