ARAMARK Holdings (ARMK) AI Stock Analysis

• Market Cap: $9.98B
• Dividend Yield: 1.05%
• Average Volume (3M): 2.27M
• Price to Earnings (P/E): 26.3
• Beta (1Y): 0.82
• Revenue Growth: -3.47%
• EPS Growth: -45.03%
• Country: US
• Employees: 266,680
• Sector: Industrials
• Sector Strength: 80
• Industry: Specialty Business Services
• EPS (TTM): 0.34
• Shares Outstanding: 265,104,860
• 10 Day Avg. Volume: 2,122,434
• 30 Day Avg. Volume: 2,274,071
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.57
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 11.02
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $44.10
• Price Target Upside: 14.84% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6

Aramark's overall stock score reflects its strong earnings call performance and technical indicators suggesting upward momentum. However, financial performance is mixed with challenges in profitability and high leverage risks. The valuation is reasonable but not particularly attractive, and the potential overbought condition may caution investors.

Positive Factors

Management Confidence

Management's confidence in achieving acceleration seems stronger given the progression of growth in the quarter.

New Client Wins

Momentum, combined with lapping facilities closures, having a 53rd week in 4Q, seeing particularly strong retention (98%), and new client wins of $760M fiscal YTD, all contributed to management's confidence in the full-year guide.

Shareholder Returns

The company has started the process of returning capital to shareholders through a recent $500M share repurchase authorization and an 11% dividend raise.

Negative Factors

FSS US Performance

FSS US was notably weaker due to headwinds from weather, one fewer workday, and facilities exits, with a combined impact of 3%.

Organic Growth

Organic growth came in below expectations, again, with organic growth of 3.1% missing estimates by approximately 170 basis points.

Retention Issues

Retention suffered from two lower margin facilities contract losses, pushing retention to 93.2%.

ARAMARK Holdings Business Overview & Revenue Model

Company Description

Aramark provides food, facilities, and uniform services to education, healthcare, business and industry, sports, leisure, and corrections clients in the United States and internationally. It operates through three segments: Food and Support Services United States, Food and Support Services International, and Uniform and Career Apparel. The company offers food-related managed services, including dining, catering, food service management, and convenience-oriented retail services; non-clinical support services, such as patient food and nutrition, retail food, and procurement services; and plant operations and maintenance, custodial/housekeeping, energy management, grounds keeping, and capital project management services. It also provides on-site restaurants, catering, convenience stores, and executive dining services; beverage and vending services; and facility management services comprising landscaping, transportation, payment, and other facility consulting services relating to building operations. In addition, the company offers concessions, banquet, and catering services; retail services and merchandise sale, recreational, and lodging services; and facility management services at sports, entertainment, and recreational facilities. Further, the company offers correctional food; and operates commissaries, laundry facilities, and property rooms. Additionally, it provides design, sourcing and manufacturing, delivery, cleaning, maintenance, and marketing services for uniforms and accessories; provides managed restroom services; and rents uniforms, work clothing, outerwear, particulate-free garments, and non-garment items and related services that include mats, shop towels, and first aid supplies. The company was formerly known as ARAMARK Holdings Corporation and changed its name to Aramark in May 2014. Aramark was founded in 1959 and is based in Philadelphia, Pennsylvania.

How the Company Makes Money

Aramark makes money primarily through contracts with institutions and organizations seeking outsourced service solutions. The company's revenue streams include food services, which involve providing catering and dining management to schools, hospitals, and businesses; facilities services, which cover cleaning, maintenance, and other building management functions; and uniform services, which involve renting, cleaning, and maintaining uniforms for various industries. Key factors contributing to Aramark's earnings include long-term client relationships, strategic partnerships, and a diverse service offering that meets the needs of a broad client base. The company benefits from economies of scale and its ability to adapt its services to the specific requirements of different sectors.

ARAMARK Holdings Financial Statement Overview

Summary

ARMK demonstrates a mixed financial performance, with challenges in profitability and revenue growth. However, it shows improving cash flow management and a stable equity position. High leverage is a concern, but positive cash conversion ratios and improving net profit margins offer optimism for future performance.

Income Statement

ARMK shows a mixed performance in its income statement. The Gross Profit Margin for TTM is 7.11%, which is a decrease from the previous years, indicating a squeeze on profitability. The Net Profit Margin stands at 1.94% TTM, showing improvement from 1.51% in the previous annual report. Revenue has slightly increased by 0.83% TTM, but remains volatile, having decreased from the previous year. EBIT and EBITDA margins indicate operational efficiency at 4.33% and 7.00% respectively, with slight fluctuations over the periods.

Balance Sheet

The Balance Sheet reflects a stable equity position with Stockholders' Equity at $3.08 billion TTM. However, the Debt-to-Equity Ratio is high at 0.40, indicating significant leverage, though improved from the previous year. ROE is positive at 11.02% TTM, suggesting reasonable returns on equity despite fluctuations. The Equity Ratio is 25.45% TTM, showing moderate reliance on equity financing.

Cash Flow

The Cash Flow statement indicates positive Free Cash Flow growth, with a rate of 58.85% TTM. The Operating Cash Flow to Net Income Ratio is 2.34 TTM, reflecting strong cash conversion capabilities. The Free Cash Flow to Net Income Ratio is also healthy at 1.43 TTM, indicating efficient cash utilization. These metrics suggest solid cash flow management despite previous fluctuations.

Breakdown
Sep 2024	Sep 2023	Sep 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
17.40B	18.85B	16.33B	12.10B	12.83B
	Gross Profit
1.43B	1.82B	1.56B	1.09B	835.89M
	EBIT
706.51M	862.93M	628.37M	191.44M	-66.32M
	EBITDA
1.17B	1.53B	1.16B	580.74M	310.67M
	Net Income Common Stockholders
262.52M	674.11M	194.48M	-92.22M	-461.44M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
714.83M	2.07B	329.45M	532.59M	2.51B
	Total Assets
12.67B	16.87B	15.08B	14.38B	15.71B
	Total Debt
5.57B	8.63B	7.79B	7.83B	9.69B
	Net Debt
4.89B	6.66B	7.46B	7.30B	7.18B
	Total Liabilities
9.63B	13.15B	12.04B	11.64B	12.97B
	Stockholders Equity
3.04B	3.71B	3.03B	2.72B	2.74B
Cash Flow		Free Cash Flow
299.09M	305.02M	329.74M	281.74M	-187.75M
	Operating Cash Flow
726.51M	766.43M	694.50M	657.08M	176.68M
	Investing Cash Flow
-415.86M	208.91M	-831.29M	-634.39M	-361.12M
	Financing Cash Flow
-1.56B	653.65M	-37.69M	-2.01B	2.44B

ARAMARK Holdings Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 38.40
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARMK, the sentiment is Positive. The current price of 38.4 is above the 20-day moving average (MA) of 33.64, above the 50-day MA of 34.22, and above the 200-day MA of 36.70, indicating a bullish trend. The MACD of 0.83 indicates Negative momentum. The RSI at 73.28 is Negative, neither overbought nor oversold. The STOCH value of 93.79 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ARMK.

ARAMARK Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
UNF	79 Outperform	$3.24B	22.46	7.17%	0.75%	5.04%	31.69%
RTO	78 Outperform	$12.12B	30.70	7.44%	2.13%	3.96%	-17.48%
CTAS	76 Outperform	$86.13B	49.15	40.15%	0.70%	7.79%	19.09%
ABM	74 Outperform	$3.09B	39.19	4.46%	1.97%	2.81%	-67.57%
CBZ	73 Outperform	$3.85B	48.18	6.25%	―	32.27%	-40.50%
ARMK	68 Neutral	$9.98B	26.32	11.77%	1.05%	-3.47%	-45.03%
Sector *	64 Neutral	$4.24B	11.64	5.23%	249.83%	4.07%	-10.54%

ARAMARK Holdings Corporate Events

Aramark Holdings Announces Senior Notes Redemption Plan

On January 17, 2025, Aramark Services, Inc., an indirect wholly owned subsidiary of Aramark, announced its decision to redeem the entire $551,538,000 principal amount of its 5.000% Senior Notes due 2025. The redemption, conditioned upon securing new indebtedness, will occur on February 18, 2025, at a price equal to the full principal amount plus accrued interest. In tandem with this redemption, Aramark has successfully syndicated new U.S. dollar denominated term loans amounting to $1,395 million, due June 2030. The proceeds from these loans are expected to be used for the redemption, refinancing existing loans, and covering related expenses, while maintaining a net leverage neutral position for the company.