Head to Head Comparison: Arcos Dorados (NYSE:ARCO) & Portillo’s (NASDAQ:PTLO)

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

Volatility and Risk

Portillo’s has a beta of 1.68, suggesting that its stock price is 68% more volatile than the S&P 500. Comparatively, Arcos Dorados has a beta of 1.12, suggesting that its stock price is 12% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and target prices for Portillo’s and Arcos Dorados, as reported by MarketBeat.com.

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

Portillo’s currently has a consensus target price of $14.00, indicating a potential upside of 51.84%. Arcos Dorados has a consensus target price of $12.00, indicating a potential upside of 61.94%. Given Arcos Dorados’ stronger consensus rating and higher probable upside, analysts clearly believe Arcos Dorados is more favorable than Portillo’s.

Institutional and Insider Ownership

98.3% of Portillo’s shares are owned by institutional investors. Comparatively, 55.9% of Arcos Dorados shares are owned by institutional investors. 6.6% of Portillo’s shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Portillo’s	$713.80 million	0.96	$18.42 million	$0.42	21.95
Arcos Dorados	$4.50 billion	0.35	$181.27 million	$0.70	10.59

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.

Profitability

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

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

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.

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.