ARAMARK Holdings (ARMK) AI Stock Analysis

• Market Cap: $11.21B
• Dividend Yield: 0.98%
• Average Volume (3M): 1.64M
• Price to Earnings (P/E): 32.9
• Beta (1Y): 0.75
• Revenue Growth: -3.47%
• EPS Growth: -45.03%
• Country: US
• Employees: 266,680
• Sector: Industrials
• Sector Strength: 86
• Industry: Specialty Business Services
• EPS (TTM): 0.34
• Shares Outstanding: 262,070,770
• 10 Day Avg. Volume: 1,949,071
• 30 Day Avg. Volume: 1,638,822
• PEG Ratio: -0.10
• Price to Book (P/B): 1.91
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 17.57
• Enterprise Value/Market Cap: 1.18
• Enterprise Value/Revenue: 0.19
• Enterprise Value/Gross Profit: 9.57
• Enterprise Value/Ebitda: 2.64
• 1Y Price Target: $45.50
• Price Target Upside: 6.33% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 8

• Rating: 71 Outperform
• Price Target: $43.00 ▲(0.49%Upside)

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 Retention and Wins

Strong retention at 98% and new client wins of $760M fiscal YTD contributed to management's confidence in the full-year guide.

Market Share

ARMK has a ~20% market share among the 4 major U.S. sports, well ahead of Sodexo.

Revenue and Growth

2H25 revenue growth should accelerate to double-digits, driven by strength in new contract wins and retention.

Negative Factors

FSS U.S. 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.

Sports Contracts

The number of ARMK's major professional U.S. sports contracts declined by 29% since '19.

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 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 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

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

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

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.

Breakdown	TTM	Sep 2024	Sep 2023	Sep 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	17.62B	17.40B	18.85B	16.33B	12.10B	12.83B
Gross Profit	1.38B	1.43B	1.82B	1.56B	1.09B	835.89M
EBITDA	1.25B	1.17B	1.53B	1.16B	580.74M	310.67M
Net Income	348.01M	262.52M	674.11M	194.48M	-92.22M	-461.44M
Balance Sheet
Total Assets	13.49B	12.67B	16.87B	15.08B	14.38B	15.71B
Cash, Cash Equivalents and Short-Term Investments	920.46M	714.83M	2.07B	329.45M	532.59M	2.51B
Total Debt	6.84B	5.57B	8.63B	7.79B	7.83B	9.69B
Total Liabilities	10.46B	9.63B	13.15B	12.04B	11.64B	12.97B
Stockholders Equity	3.02B	3.04B	3.71B	3.03B	2.72B	2.74B
Cash Flow
Free Cash Flow	371.05M	299.09M	305.02M	329.74M	281.74M	-187.75M
Operating Cash Flow	831.11M	726.51M	766.43M	694.50M	657.08M	176.68M
Investing Cash Flow	-608.51M	-415.86M	208.91M	-831.29M	-634.39M	-361.12M
Financing Cash Flow	338.38M	-1.56B	653.65M	-37.69M	-2.01B	2.44B

ARAMARK Holdings Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 42.79
• 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 42.79 is above the 20-day moving average (MA) of 40.80, above the 50-day MA of 38.78, and above the 200-day MA of 37.57, indicating a bullish trend. The MACD of 1.03 indicates Negative momentum. The RSI at 71.31 is Negative, neither overbought nor oversold. The STOCH value of 90.25 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
CTAS	76 Outperform	$88.57B	50.90	40.15%	0.72%	7.79%	19.09%
RTO	75 Outperform	$12.14B	30.99	7.44%	3.19%	3.96%	-17.48%
ARMK	71 Outperform	$11.21B	32.93	11.77%	0.98%	-3.47%	-45.03%
CBZ	71 Outperform	$4.01B	50.17	6.25%	―	32.27%	-40.50%
UNF	70 Outperform	$3.12B	21.49	7.15%	0.82%	4.17%	18.93%
ABM	61 Neutral	$3.01B	38.65	4.30%	2.19%	3.52%	-67.27%
Sector *	58 Neutral	$1.34B	4.24	-2.93%	7.38%	3.67%	-51.13%

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.