Arcos Dorados (ARCO) versus Papa Murphy's (FRSH) Critical Analysis
Arcos Dorados (NYSE: ARCO) and Papa Murphy's (NASDAQ:FRSH) are both cyclical consumer goods & services companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, dividends, valuation, analyst recommendations, institutional ownership, profitability and earnings.
Risk & Volatility
Arcos Dorados has a beta of 2.04, meaning that its share price is 104% more volatile than the S&P 500. Comparatively, Papa Murphy's has a beta of 0.14, meaning that its share price is 86% less volatile than the S&P 500.
This table compares Arcos Dorados and Papa Murphy's’ gross 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||26.05|
|Papa Murphy's||$126.88 million||0.71||$2.64 million||($0.71)||-7.51|
Arcos Dorados has higher revenue and earnings than Papa Murphy's. Papa Murphy's is trading at a lower price-to-earnings ratio than Arcos Dorados, indicating that it is currently the more affordable of the two stocks.
This table compares Arcos Dorados and Papa Murphy's’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of current recommendations for Arcos Dorados and Papa Murphy's, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Arcos Dorados presently has a consensus target price of $10.87, indicating a potential upside of 9.76%. Papa Murphy's has a consensus target price of $4.75, indicating a potential downside of 10.88%. Given Arcos Dorados’ stronger consensus rating and higher probable upside, research analysts plainly believe Arcos Dorados is more favorable than Papa Murphy's.
Institutional and Insider Ownership
36.4% of Arcos Dorados shares are held by institutional investors. Comparatively, 32.2% of Papa Murphy's shares are held by institutional investors. 3.1% of Papa Murphy's shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Arcos Dorados beats Papa Murphy's on 13 of the 14 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 Papa Murphy's
Papa Murphy’s Holdings, Inc. is a holding company. The Company, together with its subsidiaries, is a franchisor and operator of the Take ‘N’ Bake pizza chain in the United States. The Company franchises the right to operate Take ‘N’ Bake pizza franchises and operates Take ‘N’ Bake pizza stores owned by the Company. The Company operates through three segments: Domestic Company Stores, Domestic Franchise and International. Its Domestic Franchise segment consists of its domestic franchised stores, which represent its system-wide stores and derives its revenues from franchise and development fees and the collection of franchise royalties. The Domestic Company Stores segment consists of its Company-owned stores in the United States and derives its revenues from retail sales of pizza and side items to the general public. Its International segment consists of its stores outside of the United States, all of which are franchised and derives its revenues from franchise and development fees.
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