Head-To-Head Survey: Arcos Dorados (NYSE:ARCO) and Intergroup (NASDAQ:INTG)

Arcos Dorados (NYSE:ARCO) and Intergroup (NASDAQ:INTG) are both small-cap consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, profitability, dividends, earnings, risk and institutional ownership.

Institutional and Insider Ownership

55.9% of Arcos Dorados shares are owned by institutional investors. Comparatively, 3.4% of Intergroup shares are owned by institutional investors. 73.8% of Intergroup shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Arcos Dorados and Intergroup’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%
Intergroup	2.22%	-1.43%	1.60%

Analyst Recommendations

This is a breakdown of current ratings for Arcos Dorados and Intergroup, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arcos Dorados	0	2	3	0	2.60
Intergroup	0	1	0	0	2.00

Arcos Dorados presently has a consensus price target of $10.50, indicating a potential upside of 33.16%. Given Arcos Dorados’ stronger consensus rating and higher probable upside, equities research analysts plainly believe Arcos Dorados is more favorable than Intergroup.

Risk & Volatility

Arcos Dorados has a beta of 0.48, meaning that its stock price is 52% less volatile than the S&P 500. Comparatively, Intergroup has a beta of 0.06, meaning that its stock price is 94% less volatile than the S&P 500.

Valuation & Earnings

This table compares Arcos Dorados and Intergroup”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arcos Dorados	$4.68 billion	0.36	$212.12 million	$1.22	6.46
Intergroup	$73.95 million	0.96	$1.64 million	$0.71	46.42

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

Summary

Arcos Dorados beats Intergroup on 11 of the 14 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 Intergroup

The InterGroup Corporation, through its subsidiaries, operates a hotel under the Hilton San Francisco Financial District name located in San Francisco, California. The company operates through three segments: Hotel Operations, Real Estate Operations, and Investment Transactions. Its hotel consists of guest rooms and luxury suites, a restaurant, a lounge, a private dining room, meeting room space, a gym, a grand ballroom, 5-level underground parking garage, a pedestrian bridge, and a Chinese culture center. The company also invests in income-producing instruments, corporate debt and equity securities, publicly traded investment funds, mortgage-backed securities, securities issued by REITs, and other companies that invest primarily in real estate. In addition, it owns, manages, and invests in apartment complexes, single-family houses as strategic investments, and commercial real estate property located in the United States, as well as owns unimproved land in Maui, Hawaii. The InterGroup Corporation was founded in 1965 and is based in Los Angeles, California.