Del Taco Restaurants (NASDAQ:TACO) and Arcos Dorados (NYSE:ARCO) are both small-cap retail/wholesale companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, risk, valuation, earnings and dividends.

Analyst Recommendations

This is a summary of current ratings and price targets for Del Taco Restaurants and Arcos Dorados, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Del Taco Restaurants 0 1 6 0 2.86
Arcos Dorados 0 0 1 0 3.00

Del Taco Restaurants currently has a consensus price target of $16.64, indicating a potential upside of 49.67%. Arcos Dorados has a consensus price target of $12.00, indicating a potential upside of 82.65%. Given Arcos Dorados’ stronger consensus rating and higher possible upside, analysts clearly believe Arcos Dorados is more favorable than Del Taco Restaurants.

Dividends

Arcos Dorados pays an annual dividend of $0.10 per share and has a dividend yield of 1.5%. Del Taco Restaurants does not pay a dividend. Arcos Dorados pays out 16.4% of its earnings in the form of a dividend.

Insider & Institutional Ownership

77.7% of Del Taco Restaurants shares are held by institutional investors. Comparatively, 35.7% of Arcos Dorados shares are held by institutional investors. 14.6% of Del Taco Restaurants shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Del Taco Restaurants and Arcos Dorados’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Del Taco Restaurants $471.46 million 0.90 $49.87 million $0.52 21.38
Arcos Dorados $3.32 billion 0.42 $129.16 million $0.61 10.77

Arcos Dorados has higher revenue and earnings than Del Taco Restaurants. Arcos Dorados is trading at a lower price-to-earnings ratio than Del Taco Restaurants, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Del Taco Restaurants has a beta of -0.09, meaning that its stock price is 109% less volatile than the S&P 500. Comparatively, Arcos Dorados has a beta of 1.68, meaning that its stock price is 68% more volatile than the S&P 500.

Profitability

This table compares Del Taco Restaurants and Arcos Dorados’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Del Taco Restaurants 9.79% 4.84% 2.68%
Arcos Dorados 2.82% 21.03% 5.69%

Summary

Arcos Dorados beats Del Taco Restaurants on 9 of the 16 factors compared between the two stocks.

Del Taco Restaurants Company Profile

Del Taco Restaurants, Inc. develops, franchises, owns, and operates Del Taco quick-service Mexican-American restaurants in the United States. The company's restaurants offer Mexican inspired and American classic dishes. As of January 2, 2018, it operated 312 company-operated and 252 franchise-operated Del Taco restaurants located in 14 states, including 1 franchise-operated unit in Guam. Del Taco Restaurants, Inc. was founded in 1964 and is headquartered in Lake Forest, California.

Arcos Dorados Company Profile

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, CuraƧao, Ecuador, French Guiana, Guadeloupe, Martinique, Mexico, Panama, Peru, Puerto Rico, Trinidad and Tobago, Uruguay, the United States Virgin Islands of St. Croix and St. Thomas, and Venezuela. As of April 27, 2018, the company operated or franchised approximately 2,100 McDonald's-branded restaurants. Arcos Dorados Holdings Inc. was founded in 2007 and is based in Montevideo, Uruguay.

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