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Aramark Delivers Better-Than-Expected Q4 Results

Despite the challenges presented by the COVID-19 pandemic, Aramark Corp. (ARMK) delivered better-than-expected fourth-quarter results. The performance was driven by focus on innovation, cost control mechanism, and the company’s ability to flex business models based on shifting client preferences.

Aramark is an American food service, facilities, and uniform services provider to clients in areas including education, healthcare, business, prisons, and leisure. Following the results, shares were up 1.2% and closed at $38.24 on November 16.

Solid Q4 Results

The company posted adjusted earnings of $0.21 per share, 2 cents higher than analysts’ estimates of $0.19 per share. In the prior-year quarter, ARMK posted an adjusted loss of $0.35 per share.

Similarly, quarterly revenue rose 32% year-over-year to $3.55 billion, outpacing analysts’ estimates of $3.29 billion. The FSS United States segment, a major revenue contributor, jumped 51% year-over-year driving solid revenue growth.  

Overall, the company witnessed substantial new client wins and higher client retention, rebounding economic activities, and favorable pricing trends during the quarter, which led to a growth in the overall business.

For the full year 2021, ARMK reported an adjusted loss of $0.30 per share, significantly higher than the FY20 adjusted loss of $0.17 per share. Similarly, revenue came in at $12.1 billion down 5.7% annually.

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Management Comments

John Zillmer, CEO of Aramark, said, “The Company achieved record Net New Business performance across lines of business, geographies, and client size—demonstrating the execution of our strategic growth initiatives, which we are confident will position Aramark to drive higher sustainable growth and create meaningful value for our stakeholders.”

Zillmer concluded, “Our investments in growth are generating results. The robust pipeline of opportunities continues to grow, enabling Aramark to enter the new fiscal year with exceptionally strong momentum.”

Target Price

Overall, the ARMK stock has a Hold consensus rating based on 2 Buys, 2 Holds, and 1 Sell. The average Aramark price target of $37.75 implies 1.28% downside potential to current levels. Shares have gained 10.1% over the past year.

Blogger Opinion

TipRanks data shows that financial blogger opinions are only 66% Bullish on ARMK, lower than the sector average of 69%.

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