ARAMARK Holdings (ARMK) AI Stock Analysis

• Market Cap: $10.42B
• Dividend Yield: 1.06%
• Average Volume (3M): 1.99M
• Price to Earnings (P/E): 29.3
• Beta (1Y): 0.72
• Revenue Growth: -0.06%
• EPS Growth: 3.83%
• Country: US
• Employees: 266,680
• Sector: Industrials
• Sector Strength: 75
• Industry: Specialty Business Services
• EPS (TTM): 0.40
• Shares Outstanding: 262,850,920
• 10 Day Avg. Volume: 3,164,577
• 30 Day Avg. Volume: 1,994,241
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.65
• Enterprise Value/Revenue: 0.96
• Enterprise Value/Gross Profit: 43.32
• Enterprise Value/Ebitda: 13.18
• 1Y Price Target: $46.00
• Price Target Upside: 16.07% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 8

• Rating: 68 Neutral
• Price Target: $43.00 ▲(8.50% Upside)

ARAMARK Holdings' strong earnings performance and strategic growth initiatives are the most significant factors driving the score. Financial improvements and robust cash flow generation also contribute positively. However, technical indicators suggest bearish momentum, and the valuation appears high, which tempers the overall score.

Positive Factors

Earnings Growth

ARAMARK's solid and consistent margin improvement contributes to high-teens EPS growth.

Technology Utilization

ARAMARK's use of IT and AI tools for sourcing and supply chain management boosts confidence in future performance.

Negative Factors

Organic Growth

Organic growth came in below expectations, missing estimates by approximately 170 basis points.

Revenue Momentum

Revenue momentum has not met expectations, resulting in a reset of elevated expectations.

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 generates revenue primarily through its various service contracts in food services, facilities management, and uniform services. Key revenue streams include sales from food and beverage services in educational institutions and healthcare facilities, alongside management fees and service contracts for facility management. The company also earns income through uniform rental and sales, as well as through partnerships and contracts with corporations, government agencies, and non-profit organizations. Significant factors contributing to its earnings include long-term contracts with clients, a broad customer base across multiple sectors, and the ability to adapt services to meet specific client needs, which enhances customer retention and drives revenue growth.

ARAMARK Holdings Financial Statement Overview

Summary

ARAMARK Holdings is showing signs of financial improvement with increased revenue growth, reduced leverage, and strong cash flow generation. However, the decline in gross profit margin indicates potential challenges in cost management. The company is on a positive trajectory with improved profitability and cash flow metrics, positioning it well for future growth.

Income Statement

ARAMARK Holdings has shown a positive trend in revenue growth with a TTM increase of 1.42% compared to a decline in the previous year. The gross profit margin has decreased significantly in the TTM period to 2.22% from 8.19% in the previous year, indicating potential cost management issues. However, the net profit margin has improved to 2.02% in the TTM, reflecting better profitability. The EBIT and EBITDA margins have remained relatively stable, suggesting operational efficiency.

Balance Sheet

The company's debt-to-equity ratio has improved significantly to 0.12 in the TTM from 1.83 in the previous year, indicating reduced leverage and a stronger equity position. Return on equity has increased to 11.83%, showing enhanced profitability for shareholders. The equity ratio remains stable, reflecting a balanced asset structure.

Cash Flow

ARAMARK Holdings has demonstrated strong free cash flow growth of 69.20% in the TTM, indicating robust cash generation capabilities. The operating cash flow to net income ratio has improved, suggesting better cash conversion efficiency. The free cash flow to net income ratio is healthy at 81.84%, highlighting effective cash management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	17.87B	17.40B	18.85B	16.33B	12.10B	12.83B
Gross Profit	397.03M	1.43B	1.82B	1.56B	1.09B	835.89M
EBITDA	1.31B	1.27B	1.53B	1.16B	580.74M	310.67M
Net Income	361.67M	262.52M	674.11M	194.48M	-92.22M	-461.44M
Balance Sheet
Total Assets	13.28B	12.67B	16.87B	15.08B	14.38B	15.71B
Cash, Cash Equivalents and Short-Term Investments	501.49M	714.83M	2.07B	329.45M	532.59M	2.51B
Total Debt	6.62B	5.57B	8.63B	7.79B	7.83B	9.69B
Total Liabilities	10.19B	9.63B	13.15B	12.04B	11.64B	12.97B
Stockholders Equity	3.08B	3.04B	3.71B	3.03B	2.72B	2.74B
Cash Flow
Free Cash Flow	280.76M	299.09M	305.02M	329.74M	281.74M	-187.75M
Operating Cash Flow	767.09M	726.51M	766.43M	694.50M	657.08M	176.68M
Investing Cash Flow	-650.64M	-415.86M	208.91M	-831.29M	-634.39M	-361.12M
Financing Cash Flow	-81.25M	-1.56B	653.65M	-37.69M	-2.01B	2.44B

ARAMARK Holdings Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 39.63
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARMK, the sentiment is Negative. The current price of 39.63 is below the 20-day moving average (MA) of 41.57, below the 50-day MA of 41.51, and above the 200-day MA of 38.10, indicating a neutral trend. The MACD of -0.70 indicates Positive momentum. The RSI at 39.95 is Neutral, neither overbought nor oversold. The STOCH value of 33.76 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ARMK.

ARAMARK Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RTO	76 Outperform	$12.63B	38.03	5.86%	2.47%	1.56%	-32.50%
CTAS	73 Outperform	$89.20B	50.29	40.13%	0.75%	7.75%	16.21%
CBZ	72 Outperform	$3.37B	35.97	7.84%	―	46.49%	-25.62%
UNF	71 Outperform	$3.10B	21.32	7.15%	0.79%	4.18%	18.93%
ABM	69 Neutral	$3.00B	38.54	4.30%	2.12%	3.52%	-67.27%
ARMK	68 Neutral	$10.42B	29.34	12.00%	1.06%	-0.06%	3.83%
Sector *	66 Neutral	£2.68B	13.05	3.30%	3.25%	2.40%	-22.21%

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.