Foodservice, facilities, and uniform services firm Aramark Holdings (ARMK) has reported mixed financial results for the fiscal third quarter ended July 2. Following the news, shares of the company lost nearly 10.1% in pre-market trading on Tuesday.
The Pennsylvania-based company’s clients belong to the leisure, prisons, business, healthcare and education sectors. Apart from North America, it has operations in 20 nations, including Spain, Chile, Ireland, South Korea, the Philippines, Germany and the U.K.
Aramark reported earnings per share of $0.03, beating the Street’s estimate of $0.02. The company had posted a loss of $0.69 per share in the fiscal third quarter ended June 26, 2020. (See Aramark stock chart on TipRanks)
Quarterly revenue increased 39% year-over-year to $3 billion on the back of increased business activity. Revenue fell marginally short of analysts’ expectations of $3.06 billion. The company also reported sequential revenue growth due to the accelerated pace of client reopening.
FSS United States revenue grew 55% year-over-year to $1.7 billion; FSS International revenue rose 41% to $729 million; and revenue of Uniform & Career Apparel segment increased 6% to $603 million.
The CEO of Aramark, John Zillmer, said, “I am confident that Aramark is well-positioned to execute on the numerous attractive strategic opportunities ahead and deliver strong performance for our stakeholders by continuing to drive growth and innovation designed to win new business, actively maintain balance sheet flexibility, and pursue cost discipline throughout the organization.”
Two months ago, Bank of America Securities analyst Gary Bisbee maintained a Buy rating on the stock and raised the price target to $44 from $43 (26.1% upside potential). The analyst said, “The pace of revenue rebuild should step up meaningfully in the September and December quarters, which should boost interest in the stock.”
Overall, the stock has a Moderate Buy consensus based on 3 Buys and 2 Holds. The average Aramark Holdings price target of $41.40 implies 18.7% upside potential. Shares of the company have gained 42.3% over the past year.
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