Head to Head Survey: Arcos Dorados (NYSE:ARCO) vs. Portillo’s (NASDAQ:PTLO)

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

Analyst Ratings

This is a summary of current ratings and recommmendations for Arcos Dorados and Portillo’s, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arcos Dorados	0	0	1	0	3.00
Portillo’s	0	4	3	0	2.43

Arcos Dorados presently has a consensus target price of $12.00, suggesting a potential upside of 62.38%. Portillo’s has a consensus target price of $14.00, suggesting a potential upside of 47.21%. Given Arcos Dorados’ stronger consensus rating and higher probable upside, research analysts plainly believe Arcos Dorados is more favorable than Portillo’s.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Arcos Dorados	3.25%	29.74%	4.99%
Portillo’s	3.65%	5.62%	1.82%

Risk and Volatility

Arcos Dorados has a beta of 1.13, suggesting that its stock price is 13% more volatile than the S&P 500. Comparatively, Portillo’s has a beta of 1.68, suggesting that its stock price is 68% more volatile than the S&P 500.

Institutional and Insider Ownership

55.9% of Arcos Dorados shares are held by institutional investors. Comparatively, 98.3% of Portillo’s shares are held by institutional investors. 6.6% of Portillo’s shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Arcos Dorados and Portillo’s”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arcos Dorados	$4.50 billion	0.35	$181.27 million	$0.70	10.56
Portillo’s	$713.80 million	0.99	$18.42 million	$0.42	22.64

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

Portillo’s Inc. owns and operates fast casual restaurants in the United States. The company offers Chicago-style hot dogs and sausages, Italian beef sandwiches, char-grilled burgers, chopped salads, crinkle-cut French fries, homemade chocolate cakes, and chocolate cake shake. It offers its products through its website, application, and certain third-party platforms. Portillo’s Inc. was founded in 1963 and is based in Oak Brook, Illinois.