Arcos Dorados (NYSE:ARCO – Get Free Report) and Shake Shack (NYSE:SHAK – Get Free Report) are both retail/wholesale companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, earnings, analyst recommendations, valuation and profitability.
Analyst Ratings
This is a summary of recent ratings and recommmendations for Arcos Dorados and Shake Shack, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Arcos Dorados | 0 | 3 | 2 | 0 | 2.40 |
| Shake Shack | 1 | 11 | 15 | 0 | 2.52 |
Arcos Dorados currently has a consensus price target of $8.70, indicating a potential upside of 5.14%. Shake Shack has a consensus price target of $91.00, indicating a potential upside of 62.50%. Given Shake Shack’s stronger consensus rating and higher possible upside, analysts plainly believe Shake Shack is more favorable than Arcos Dorados.
Profitability
| Net Margins | Return on Equity | Return on Assets | |
| Arcos Dorados | 4.86% | 10.47% | 2.06% |
| Shake Shack | 2.76% | 9.62% | 2.81% |
Insider & Institutional Ownership
55.9% of Arcos Dorados shares are held by institutional investors. Comparatively, 86.1% of Shake Shack shares are held by institutional investors. 8.3% of Shake Shack shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Earnings and Valuation
This table compares Arcos Dorados and Shake Shack”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Arcos Dorados | $4.68 billion | 0.37 | $212.12 million | $1.11 | 7.45 |
| Shake Shack | $1.49 billion | 1.61 | $45.72 million | $0.98 | 57.14 |
Arcos Dorados has higher revenue and earnings than Shake Shack. Arcos Dorados is trading at a lower price-to-earnings ratio than Shake Shack, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Arcos Dorados has a beta of 0.46, suggesting that its share price is 54% less volatile than the S&P 500. Comparatively, Shake Shack has a beta of 1.63, suggesting that its share price is 63% more volatile than the S&P 500.
Summary
Shake Shack beats Arcos Dorados on 9 of the 14 factors compared between the two stocks.
About Arcos Dorados
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, Curacao, Ecuador, French Guiana, Guadeloupe, Martinique, Mexico, Panama, Peru, Puerto Rico, Trinidad and Tobago, Uruguay, the U.S. Virgin Islands of St. Croix and St. Thomas, and Venezuela. The company was founded in 2007 and is based in Montevideo, Uruguay.
About Shake Shack
Shake Shack Inc. owns, operates, and licenses Shake Shack restaurants (Shacks) in the United States and internationally. Its Shacks offers hamburgers, chicken, hot dogs, crinkle cut fries, shakes, frozen custard, beer, wine, and other products. The company was founded in 2001 and is headquartered in New York, New York.
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