Analyzing Arcos Dorados (NYSE:ARCO) and Super Group (SGHC) (NYSE:SGHC)

Arcos Dorados (NYSE:ARCO) and Super Group (SGHC) (NYSE:SGHC) are both consumer discretionary companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, dividends, risk and analyst recommendations.

Profitability

This table compares Arcos Dorados and Super Group (SGHC)’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arcos Dorados	5.15%	12.50%	2.58%
Super Group (SGHC)	16.74%	49.92%	31.22%

Valuation & Earnings

This table compares Arcos Dorados and Super Group (SGHC)”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arcos Dorados	$4.68 billion	0.31	$212.12 million	$1.22	5.70
Super Group (SGHC)	$2.23 billion	2.58	$217.00 million	$0.81	14.07

Super Group (SGHC) has lower revenue, but higher earnings than Arcos Dorados. Arcos Dorados is trading at a lower price-to-earnings ratio than Super Group (SGHC), indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

55.9% of Arcos Dorados shares are owned by institutional investors. Comparatively, 5.1% of Super Group (SGHC) shares are owned by institutional investors. 10.4% of Super Group (SGHC) shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Dividends

Arcos Dorados pays an annual dividend of $0.06 per share and has a dividend yield of 0.9%. Super Group (SGHC) pays an annual dividend of $0.20 per share and has a dividend yield of 1.8%. Arcos Dorados pays out 4.9% of its earnings in the form of a dividend. Super Group (SGHC) pays out 24.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Arcos Dorados has increased its dividend for 1 consecutive years.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Arcos Dorados and Super Group (SGHC), as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arcos Dorados	0	2	3	1	2.83
Super Group (SGHC)	0	2	5	1	2.88

Arcos Dorados currently has a consensus price target of $9.75, indicating a potential upside of 40.31%. Super Group (SGHC) has a consensus price target of $17.20, indicating a potential upside of 50.92%. Given Super Group (SGHC)’s stronger consensus rating and higher probable upside, analysts plainly believe Super Group (SGHC) is more favorable than Arcos Dorados.

Risk & Volatility

Arcos Dorados has a beta of 0.54, meaning that its stock price is 46% less volatile than the S&P 500. Comparatively, Super Group (SGHC) has a beta of 1.09, meaning that its stock price is 9% more volatile than the S&P 500.

Summary

Super Group (SGHC) beats Arcos Dorados on 12 of the 17 factors compared between 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 Super Group (SGHC)

Super Group (SGHC) Limited operates as an online sports betting and gaming operator. It offers Betway, an online sports betting brand; and Spin, a multi-brand online casino offering. Super Group (SGHC) Limited is based in Saint Peter Port, Guernsey.