DCF Tool

ARCO

Arcos Dorados Holdings Inc. is a company that owns the master franchise of the fast food restaurant chain McDonald’s in 20 countries within Latin America and the Caribbean. As of December 31, 2010, it represented 6.7% of McDonald's franchised restaurants globally.
Analysis Results
Intrinsic Value $0.40
Latest Price $11.00
Relative Value 2639% overvalued
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Cash Flow (Millions)
Analysis Parameters
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Analysis Details
Growth Rate Projection

An exponential growth model was fit to the past cash flow data, giving more weight to more recent years. This model determined a growth rate estimate of -28.8%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 8.4%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of -28.8%, the cash flows for the next 5 years are projected.

The present value of each year's flow is adjusted to present value using the discount rate.

Year Future flow (million) Present value (million)
2023 10.8 9.95
2024 7.69 6.54
2025 5.47 4.29
2026 3.9 2.82
2027 2.77 1.85
Terminal Value

Assuming a growth rate after the projection years of 2.0%, the terminal value of the company would be 43.9 million. This corresponds to a present value of 27.0 million.

Intrinsic Value Per Share

The total present value of the projected cash flows is 25.4 million. Adding in the terminal value gives a total present value of 52.5 million.

There are presently 131.0 million outstanding shares, so the intrinsic value per share is 0.4.

Financial Statements

The following data was to determine the past cash flows.

Current Assets 684,363,000
Current Cash 304,396,000
Current Liabilities 759,412,000
Current Debt 19,351,000
Non-Cash Working Capital (NCWC) -360,094,000
Change in NCWC -8,258,000
EBIT 264,422,000
Tax Provision 85,476,000
Depreciation and Amortization 119,777,000
Capital Expenditure -217,115,000
Unlevered Free Cash Flow 58,993,251
Current Assets 540,116,000
Current Cash 278,830,000
Current Liabilities 617,863,000
Current Debt 4,741,000
Non-Cash Working Capital (NCWC) -351,836,000
Change in NCWC -101,036,000
EBIT 139,519,000
Tax Provision 31,933,000
Depreciation and Amortization 120,394,000
Capital Expenditure -114,999,000
Unlevered Free Cash Flow -13,397,862
Current Assets 415,531,000
Current Cash 165,989,000
Current Liabilities 503,471,000
Current Debt 3,129,000
Non-Cash Working Capital (NCWC) -250,800,000
Change in NCWC 44,655,000
EBIT -66,754,000
Tax Provision 17,532,000
Depreciation and Amortization 126,853,000
Capital Expenditure -86,311,000
Unlevered Free Cash Flow 18,443,000
Current Assets 405,368,000
Current Cash 121,905,000
Current Liabilities 595,447,000
Current Debt 16,529,000
Non-Cash Working Capital (NCWC) -295,455,000
Change in NCWC -73,615,000
EBIT 159,936,000
Tax Provision 38,837,000
Depreciation and Amortization 123,218,000
Capital Expenditure -265,235,000
Unlevered Free Cash Flow -107,913,551
Current Assets 464,562,000
Current Cash 197,282,000
Current Liabilities 493,312,000
Current Debt 4,192,000
Non-Cash Working Capital (NCWC) -221,840,000
Change in NCWC 54,426,000
EBIT 123,458,000
Tax Provision 48,136,000
Depreciation and Amortization 105,800,000
Capital Expenditure -197,041,000
Unlevered Free Cash Flow 16,866,739
Current Assets 653,037,000
Current Cash 328,079,000
Current Liabilities 605,583,000
Current Debt 4,359,000
Non-Cash Working Capital (NCWC) -276,266,000
Change in NCWC -6,444,000
EBIT 272,935,000
Tax Provision 53,314,000
Depreciation and Amortization 99,382,000
Capital Expenditure -174,766,000
Unlevered Free Cash Flow 111,510,600
Current Assets 445,190,000
Current Cash 194,803,000
Current Liabilities 548,308,000
Current Debt 28,099,000
Non-Cash Working Capital (NCWC) -269,822,000
Change in NCWC -122,725,000
EBIT 178,580,000
Tax Provision 59,641,000
Depreciation and Amortization 92,969,000
Capital Expenditure -92,282,000
Unlevered Free Cash Flow -20,286,728
Current Assets 378,996,000
Current Cash 112,519,000
Current Liabilities 577,673,000
Current Debt 164,099,000
Non-Cash Working Capital (NCWC) -147,097,000
Change in NCWC 48,119,000
EBIT 93,407,000
Tax Provision 22,816,000
Depreciation and Amortization 110,715,000
Capital Expenditure -90,964,000
Unlevered Free Cash Flow 161,277,000

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