ARAMARK Holdings (ARMK) AI Stock Analysis

• Market Cap: $11.37B
• Dividend Yield: 0.94%
• Average Volume (3M): 1.60M
• Price to Earnings (P/E): 34.0
• Beta (1Y): 0.76
• Revenue Growth: -3.47%
• EPS Growth: -45.03%
• Country: US
• Employees: 266,680
• Sector: Industrials
• Sector Strength: 93
• Industry: Specialty Business Services
• EPS (TTM): 0.34
• Shares Outstanding: 262,070,770
• 10 Day Avg. Volume: 1,465,692
• 30 Day Avg. Volume: 1,603,930
• PEG Ratio: 3.18
• Price to Book (P/B): 3.79
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 30.53
• Enterprise Value/Market Cap: 1.51
• Enterprise Value/Revenue: 0.24
• Enterprise Value/Gross Profit: 12.40
• Enterprise Value/Ebitda: 3.42
• 1Y Price Target: $45.92
• Price Target Upside: 4.63% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 7

• Rating: 71 Outperform
• 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 Business Overview & Revenue Model

Company Description

Aramark 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 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	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
EBITDA	1.17B	1.53B	1.16B	580.74M	310.67M
Net Income	262.52M	674.11M	194.48M	-92.22M	-461.44M
Balance Sheet
Total Assets	12.67B	16.87B	15.08B	14.38B	15.71B
Cash, Cash Equivalents and Short-Term Investments	714.83M	2.07B	329.45M	532.59M	2.51B
Total Debt	5.57B	8.63B	7.79B	7.83B	9.69B
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: 43.89
• 50DMA: Positive
• 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 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 Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CTAS	76 Outperform	$90.00B	50.27	40.16%	0.96%	7.75%	16.31%
ABM	75 Outperform	$2.96B	38.50	4.30%	2.15%	3.52%	-67.27%
CBZ	74 Outperform	$4.16B	52.93	6.25%	―	32.27%	-40.50%
RTO	73 Outperform	$12.77B	32.25	7.44%	0.11%	3.96%	-17.48%
ARMK	71 Outperform	$11.37B	33.98	11.77%	0.94%	-3.47%	-45.03%
Sector *	65 Neutral	$11.05B	15.76	5.13%	1.92%	3.11%	-24.90%
UNF	61 Neutral	$3.11B	21.62	7.15%	0.79%	4.18%	18.93%

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.