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Arcos Dorados Holdings Inc-A

ARCOBelow valueExpectations · modest

Held by 3 superinvestors.

Price$8.01
Margin of safety−20%
Holders3
Total value$103.8M

SEC 10-K · fundamentals

Business quality

as of 2025-12-31
Revenue growth
+4.7%
Net margin
4.5%
ROE
27.5%
FCF margin
0.3%
Revenue $1.98B → $4.68B · 6y
What makes a business high quality

Valuation · value band

Margin of safety

$10/ sh · growth-anchored intrinsic value
margin of safety
fair value
above fair value
$8
cheaperpricier

Zero-growth floor

$4

Central IV

$10

Optimistic top

$43

Arcos Dorados Holdings Inc-A (ARCO): Two methods value the business — a conservative owner-earnings DCF and a growth-credited Greenwald estimate, $4–$43 / sh. Today’s price sits below both (price $8 as of 2026-08-26).

The middle figure is the main read. The right end is the optimistic case under the same conservative caps — not an absolute ceiling.

Revenue growth 10% (lower of historical trend and fundamental cap, capped by moat) · moat 20 yr · discount 12.3% · Zero-growth downside $4

Price as of 2026-08-26 · yahoo · DGS10 4.7% @ 2026-08-26.

Method & numbers

Model cautions

  • The two methods’ midpoints differ materially — growth assumptions warrant review (over 20%).
  • Growth nearly matches the discount rate — the estimate is sensitive to assumptions.

A conservative intrinsic-value band (zero-growth floor to growth-capped DCF) plus a tangible asset floor — not investment advice, not a buy/sell signal, and not a price target.

Owner-earnings DCF $5.26 – $11.97 · Greenwald $18.32 – $42.94 (neutral $31.41) · zero-growth base $9.96 · reproduction $2.95

Moat Franchise (moat) · terminal value 20% of present value · owner-earnings yield 7% vs 10Y 4.7%.

Graham earnings-power value (normalized NOPAT)$7.49 – $9.96 / sh

Normalized NOPAT = average operating margin over the years shown × latest-year revenue × (1 − normalized tax); then + D&A − maintenance capex (write A). Unlevered (pre-interest, attributable to all capital). Capitalized at the 9–11% rate band (read as a WACC proxy). Enterprise → equity bridge applied: + cash − total debt.

Years: 2025, 2024, 2023, 2022, 2021

v1 simplifications: Maintenance capex (ok) deducted in full cash (write A): EPV = (NOPAT + D&A − maintenance capex) / WACC; no tax shield on the capex term. Share-based compensation is left as a real expense (not added back).

Buffett owner-earnings value$4.41 – $5.23 / sh

Owner earnings = average net income + average D&A − maintenance capex (zero-growth floor; no ΔNWC). Levered (starts from net income, already after interest — an equity-holder stream). Capitalized at the 10.7–12.7% band (9–11% base + 1.7pp leverage premium). No enterprise→equity bridge: the capitalized result is already equity value (subtracting debt would double-count interest).

Years: 2025, 2024, 2023, 2022, 2021

v1 simplifications: Owner earnings = net income + D&A − maintenance capex (ok); the working-capital change is excluded (maintenance ΔNWC ≈ 0; growth ΔNWC is carried in growth value, not double-counted). One-time items are not separately normalized (multi-year averaging smooths them partially). Share-based compensation is left as a real expense (not added back); see the SBC/OE disclosure. Capitalized at the 9–11% base band plus a 1.7pp leverage premium (cost of equity rises with leverage — MM Proposition II). Net debt is about 6.5 years of owner earnings, adding 1.7pp of cost-of-equity risk premium.

Reproduction value = tangible net assets $621.54M = $2.95 / sh. Tangible net assets = shareholders' equity − goodwill − intangibles, ÷ diluted shares (no R&D history to capitalize).

Moat reading: Franchise test compares earnings power (EPV) against reproduction value on both AV_conservative (tangible + capitalized R&D) and AV_reproduction (conservative + acquired-reset proxy). Both must clear the franchise multiple for a moat signal; near it, a commodity; below it, value destruction. A directional reading, not a verdict.

Assumes a wide moat · competitive-advantage period ≈ 20 years (earnings intact, ROIC stable over history).

Growth value: if the moat holds for 20 yr at ROIIC ≈ 96%, $8.36–$32.98 / sh (neutral $21.45). Conservative, not a forecast.

Window FY 2025, 2024, 2023, 2022, 2021 · discount band 9%–11% · normalized tax 21% (Average effective tax rate over 5 year(s), capped at the statutory 21%.) · diluted shares.

Baseline 9%–11%, net debt ≈ 6.5 years of owner earnings → +1.7pp cost-of-equity premium → effective 10.7%–12.7%.

Owner-earnings DCF: growth g₁ 10% · OE FY 2025, 2024, 2023, 2022, 2021 · Discount band: 10.89%–13.73% (DGS10 +4.5% to a 12% strict end, each +1.73pp for leverage premium, as of 2026-08-26). No enterprise→equity bridge: owner earnings already flow to shareholders (post-interest), so no net cash is added and no debt subtracted — matching the engine owner-earnings lamp. Two-method midpoint gap 104%.

What the price is betting

Today's price pencils in about 7.5% a year in owner-earnings for the next few years. Revenue actually grew 18.8% a year.

Below what it has already done.

Roughly, the price needs its historical revenue growth to run about 4 more years to hold up.

How to read intrinsic value

SEC 13F · holders

Superinvestors Holding This Security

3 holders · $103.8M combined · this quarter +1 opened / -0 exited

This quarter1 opened1 added
Holders 2 → 3 · last 7q

SEC 13F · notes

Written summary

Arcos Dorados Holdings Inc-A (ARCO) is held by 3 of the superinvestors tracked on Compounder, with a combined $103.8M in reported 13F value. The largest position belongs to Richard Pzena, where it makes up 0.3% of the portfolio.

Other notable holders by value include Sarah Ketterer (0.2% of its book) and Dodge & Cox (0.0% of its book).

Over the latest quarter, 1 of the tracked filers opened a new position in ARCO, 1 added to existing ones, 0 trimmed, and 0 sold out entirely.

Holder counts and values reflect the most recent SEC Form 13F filings, through the quarter ended 2026-06-30. Source: SEC EDGAR. A 13F shows only long US-listed positions and can lag the real portfolio by up to 45 days, so this is disclosed long ownership, not a complete picture.

How to read a 13F

SEC 13F · co-ownership

Also held by these investors

Investors holding Arcos Dorados Holdings Inc-A (ARCO) also commonly hold →

ARCO's price is below its conservative value band. Browse all undervalued stocks by margin of safety

Also on

Sources· SEC EDGAR 13F as of 2026-06-30 · filed 2026-08-13

Educational data only — not investment advice. 13F positions are self-reported and can lag up to 45 days.

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