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ARAMARK Holdings (ARMK)
NYSE:ARMK
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ARAMARK Holdings (ARMK) AI Stock Analysis

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ARMK

ARAMARK Holdings

(NYSE:ARMK)

Rating:71Outperform
Price Target:
$43.00
▼(-2.03%Downside)
Aramark Holdings' overall stock score reflects strong earnings call insights and solid financial performance, despite high leverage and valuation concerns. The technical analysis indicates a strong upward trend, though caution is advised due to overbought signals.
Positive Factors
Client Wins and Retention
Strong client retention at 98% and new client wins amounting to $760 million fiscal year-to-date boost management’s confidence in the full-year guidance.
Future Revenue Growth
Revenue growth is expected to accelerate to double-digits in the latter half of the year, driven by strength in new contract wins and retention.
Market Position
ARMK holds a strong 20% market share among the four major U.S. sports, significantly ahead of Sodexo.
Negative Factors
Decline in Sports Contracts
The number of major professional U.S. sports contracts for ARMK declined by 29% since 2019.
Organic Growth
Organic growth came in below expectations, with a quarter growth of 4.7%, missing the market estimate of 6.6%.
Revenue Challenges
FSS US faced revenue challenges due to headwinds from weather, fewer workdays, and facilities exits, impacting growth by 3%.

ARAMARK Holdings (ARMK) vs. SPDR S&P 500 ETF (SPY)

ARAMARK Holdings Business Overview & Revenue Model

Company DescriptionAramark Holdings (ARMK) is a global leader in food, facilities management, and uniform services. Operating across various sectors, including education, healthcare, business, sports, entertainment, and corrections, Aramark provides comprehensive solutions to enhance everyday experiences. The company offers a wide range of services, from catering and dining solutions to janitorial and maintenance services, as well as custom uniform delivery and management.
How the Company Makes MoneyAramark Holdings generates revenue primarily through its three main segments: Food and Support Services (FSS) United States, FSS International, and Uniform and Career Apparel. In the FSS segments, the company earns money by providing food services, facilities management, and other support services to a diverse client base, including schools, hospitals, businesses, and stadiums. Revenue is generated through long-term contracts and partnerships with these institutions, where Aramark supplies and manages dining services, catering, and facility operations. The Uniform and Career Apparel segment contributes to revenue by offering rental, sale, and cleaning services for uniforms and workwear across various industries. This segment benefits from ongoing contracts and the need for companies to maintain professional and hygienic work environments. Key factors contributing to Aramark's earnings include its strong client relationships, diversified service offerings, and its ability to adapt to client needs through innovation and operational efficiency.

ARAMARK Holdings Earnings Call Summary

Earnings Call Date:May 06, 2025
(Q2-2025)
|
% Change Since: 28.67%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Positive
The earnings call indicates strong performance and growth across Aramark's business, especially in client retention and international revenue. Despite some challenges from facility exits and weather-related issues, the company shows confidence in continued growth and profitability.
Q2-2025 Updates
Positive Updates
Strong Client Retention Rate
Aramark reported a client retention rate above 98% in both FSS US and international, a level usually not seen at this point in the fiscal calendar.
Revenue Growth
Revenue growth accelerated monthly in the second quarter, continuing into April with a 6% growth rate. Organic revenue grew to $4.3 billion, a 3% increase year-over-year.
Record AOI Profitability
Aramark experienced record AOI profitability for any second quarter in global FSS history, with over 20% adjusted EPS growth on a constant currency basis.
International Segment Performance
International organic revenue increased to $1.3 billion, a 10% year-over-year increase, with the UK, Spain, Chile, and Canada leading the way.
New Client Wins
Aramark secured new client wins totaling $760 million fiscal year-to-date, with significant new business opportunities ahead.
Negative Updates
Facilities Accounts Exit Impact
The exit of some facilities accounts last year impacted revenue by approximately 3% during the second quarter.
Weather and Calendar Shifts
Revenue was negatively affected by a calendar shift in education and temporary weather-related client site closures in the Southeast United States.
Company Guidance
During Aramark's Second Quarter Fiscal 2025 Earnings Results Conference Call, guidance for the remainder of the fiscal year was outlined with a focus on sustaining strong performance metrics. Key highlights included a client retention rate above 98% and new client wins totaling $760 million year-to-date, supporting a net new business growth target of 4% to 5%. Organic revenue grew to $4.3 billion, a 3% increase, with 6% revenue growth continuing into April. Aramark reported record AOI profitability for any second quarter, with over 20% adjusted EPS growth on a constant currency basis. The company anticipates double-digit revenue growth in the second half of fiscal '25, driven by a strong sales pipeline, higher base business volume, and continued operational excellence, while maintaining its financial performance outlook for the year.

ARAMARK Holdings Financial Statement Overview

Summary
Aramark Holdings demonstrates solid financial health with strong revenue growth and profitability. While the company effectively manages its cash flows, high leverage remains a potential risk. Overall, Aramark appears well-positioned in its industry, with opportunities to enhance profitability and reduce financial risk.
Income Statement
78
Positive
Aramark Holdings exhibits strong revenue growth with a 7.94% increase in the most recent fiscal year, indicating robust market demand and business expansion. The gross profit margin is stable at 7.85% for TTM, reflecting effective cost management. However, net profit margin remains modest at 1.97%, suggesting room for improvement in operational efficiency. EBIT and EBITDA margins are healthy, at 4.38% and 7.08% respectively, indicating strong core profitability.
Balance Sheet
65
Positive
The debt-to-equity ratio stands at 2.27, indicating a relatively high leverage, which might pose financial risk if not managed carefully. The return on equity is 11.52%, reflecting decent returns for shareholders. The equity ratio is 22.39%, highlighting a stable asset base but also indicating a reliance on debt for financing.
Cash Flow
72
Positive
Aramark's free cash flow increased by 24.07% in the latest TTM period, showcasing strong cash generation capabilities. The operating cash flow to net income ratio is 2.39, indicating efficient cash generation relative to reported profits. The free cash flow to net income ratio is 1.07, suggesting effective conversion of profits into cash.
BreakdownSep 2024Sep 2023Sep 2022Dec 2021Dec 2020
Income Statement
Total Revenue17.40B18.85B16.33B12.10B12.83B
Gross Profit1.43B1.82B1.56B1.09B835.89M
EBITDA1.17B1.53B1.16B580.74M310.67M
Net Income262.52M674.11M194.48M-92.22M-461.44M
Balance Sheet
Total Assets12.67B16.87B15.08B14.38B15.71B
Cash, Cash Equivalents and Short-Term Investments714.83M2.07B329.45M532.59M2.51B
Total Debt5.57B8.63B7.79B7.83B9.69B
Total Liabilities9.63B13.15B12.04B11.64B12.97B
Stockholders Equity3.04B3.71B3.03B2.72B2.74B
Cash Flow
Free Cash Flow299.09M305.02M329.74M281.74M-187.75M
Operating Cash Flow726.51M766.43M694.50M657.08M176.68M
Investing Cash Flow-415.86M208.91M-831.29M-634.39M-361.12M
Financing Cash Flow-1.56B653.65M-37.69M-2.01B2.44B

ARAMARK Holdings Technical Analysis

Technical Analysis Sentiment
Positive
Last Price43.89
Price Trends
50DMA
41.21
Positive
100DMA
37.74
Positive
200DMA
37.99
Positive
Market Momentum
MACD
0.83
Positive
RSI
64.18
Neutral
STOCH
66.99
Neutral
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 43.89 is above the 20-day moving average (MA) of 43.11, above the 50-day MA of 41.21, and above the 200-day MA of 37.99, indicating a bullish trend. The MACD of 0.83 indicates Positive momentum. The RSI at 64.18 is Neutral, neither overbought nor oversold. The STOCH value of 66.99 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ARMK.

ARAMARK Holdings Risk Analysis

ARAMARK Holdings disclosed 32 risk factors in its most recent earnings report. ARAMARK Holdings reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

ARAMARK Holdings Peers Comparison

Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
76
Outperform
$90.00B50.2740.16%0.96%7.75%16.31%
75
Outperform
$2.96B38.504.30%2.15%3.52%-67.27%
74
Outperform
$4.16B52.936.25%32.27%-40.50%
73
Outperform
$12.77B32.257.44%0.11%3.96%-17.48%
71
Outperform
$11.37B33.9811.77%0.94%-3.47%-45.03%
65
Neutral
$11.05B15.765.13%1.92%3.11%-24.90%
61
Neutral
$3.11B21.627.15%0.79%4.18%18.93%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
ARMK
ARAMARK Holdings
43.89
10.36
30.90%
ABM
ABM Industries
47.70
-6.30
-11.67%
CBZ
CBIZ
77.81
-6.86
-8.10%
CTAS
Cintas
223.56
33.79
17.81%
UNF
UniFirst
173.40
-17.71
-9.27%
RTO
Rentokil Initial
25.02
-4.74
-15.93%

ARAMARK Holdings Corporate Events

Private Placements and Financing
Aramark Holdings Announces Senior Notes Redemption Plan
Neutral
Jan 17, 2025

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.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 03, 2025