Arcos Dorados Holdings Inc. Class A Shares (ARCO) fair value

ACCE thesis

Arcos Dorados is the largest McDonald's franchisee in the world by restaurant count, operating several thousand McDonald's restaurants across Latin America and the Caribbean under a master franchise agreement that gives it control of the brand's regional system. The moat is the franchise itself: scale in a region where McDonald's competes on delivery, digital ordering and value bundles, plus a long operating history with local supply chains and real estate. The near-term driver is revenue growth of 14.3% against a trailing P/E of 6.6 and a forward P/E of 14.5, which implies the market expects earnings to normalise sharply from a strong recent year. A 5.6% operating margin and a 36.4% ROE show what the business earns on its equity, but the thin margin and the Latin American currency exposure mean the reported numbers swing with FX and inflation, so the forward multiple deserves scrutiny. At 1.7 billion dollars of market cap, with no index membership, the name is small enough to be overlooked and worth a deeper look at whether the forward earnings path holds.