Critical Survey: Reborn Coffee (NASDAQ:REBN) & Arcos Dorados (NYSE:ARCO)

Reborn Coffee (NASDAQ:REBN) and Arcos Dorados (NYSE:ARCO) are both consumer staples companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, risk, earnings and valuation.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Reborn Coffee	$6.20 million	0.84	-$4.00 million	($1.99)	-1.26
Arcos Dorados	$4.49 billion	0.46	$181.27 million	$0.81	12.01

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

Institutional & Insider Ownership

1.8% of Reborn Coffee shares are owned by institutional investors. Comparatively, 55.9% of Arcos Dorados shares are owned by institutional investors. 65.9% of Reborn Coffee shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Reborn Coffee and Arcos Dorados, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Reborn Coffee	0	0	0	0	N/A
Arcos Dorados	0	0	2	0	3.00

Arcos Dorados has a consensus target price of $13.50, indicating a potential upside of 38.75%. Given Arcos Dorados’ higher possible upside, analysts plainly believe Arcos Dorados is more favorable than Reborn Coffee.

Risk and Volatility

Reborn Coffee has a beta of 2.91, suggesting that its stock price is 191% more volatile than the S&P 500. Comparatively, Arcos Dorados has a beta of 1.17, suggesting that its stock price is 17% more volatile than the S&P 500.

Profitability

This table compares Reborn Coffee and Arcos Dorados’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Reborn Coffee	-65.25%	-196.20%	-41.68%
Arcos Dorados	3.80%	36.55%	5.97%

Summary

Arcos Dorados beats Reborn Coffee on 10 of the 13 factors compared between the two stocks.

About Reborn Coffee

Reborn Coffee, Inc., through its subsidiaries, operates and franchises retail locations, kiosks, and cafes that focus on serving specialty-roasted coffee in California. It purchases, roasts, and sells coffee, tea and other beverages, and various food items. It offers products in various form factors, such as whole bean roasted coffee bags, single-serve drip bags, and pour over packs. The company also offers its products online. Reborn Coffee, Inc. was founded in 2014 and is headquartered in Brea, California.

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.