TH International (NASDAQ:THCH) vs. Arcos Dorados (NYSE:ARCO) Head to Head Review

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

Insider and Institutional Ownership

55.9% of Arcos Dorados shares are owned by institutional investors. Comparatively, 91.9% of TH International shares are owned by institutional investors. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current recommendations and price targets for Arcos Dorados and TH International, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arcos Dorados	0	0	1	0	3.00
TH International	0	0	0	0	0.00

Arcos Dorados currently has a consensus price target of $12.00, indicating a potential upside of 53.55%. Given Arcos Dorados’ stronger consensus rating and higher probable upside, equities research analysts plainly believe Arcos Dorados is more favorable than TH International.

Risk & Volatility

Arcos Dorados has a beta of 1.13, indicating that its stock price is 13% more volatile than the S&P 500. Comparatively, TH International has a beta of 0.54, indicating that its stock price is 46% less volatile than the S&P 500.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arcos Dorados	$4.33 billion	0.38	$181.27 million	$0.70	11.16
TH International	$221.94 million	0.47	-$123.81 million	($2.55)	-1.22

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Arcos Dorados	3.25%	29.74%	4.99%
TH International	-40.57%	N/A	-16.23%

Summary

Arcos Dorados beats TH International on 11 of the 13 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 TH International

TH International Limited operates Tim Hortons coffee shops in mainland China, Hong Kong, and Macau. The company offers brewed tea, coffee, milk tea, lemonade, hot chocolate, and coffee drinks. It is also involved in franchise related business. The company is based in Shanghai, the People's Republic of China.