Aramark (ARMK) | Investment Case

1. Company Snapshot

1.a. 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.

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1.b. Last Insights on ARMK

Aramark's recent performance was negatively impacted by its Q4 earnings miss, with quarterly earnings of $0.64 per share, falling short of the Zacks Consensus Estimate of $0.65 per share. Despite double-digit operating income and EPS growth, and record-high customer retention, the company's results were marred by a revenue and EPS lag. Additionally, Black Creek Investment Management Inc. reduced its stake in Aramark by 1.4%, which may have contributed to the stock's underperformance.

1.c. Company Highlights

Last Price	37.77
Change Percentage	0.83%
Open	37.48
Previous Close	37.46
Market Cap ( Millions)	9930
Volume	375391
Year High	44.49
Year Low	29.92
M A 50	38.33
M A 200	38.24

FCF Yield	4.58%
Dividend Yield	1.15%
ROE	10.59%
Debt / Equity	181.76%
Net Debt / EBIDTA	407.05%
Price To Book	3.16
Price Earnings Ratio	30.45
Price To FCF	21.85
Price To sales	0.54
EV / EBITDA	12.02

2. Aramark's Strong FY2025 Results Set Stage for Continued Growth in FY2026

Aramark reported robust financial performance for FY2025, with organic revenue growth of 14% in the fourth quarter driven by new business wins, high client retention rates, and base business growth. The company's adjusted operating income (AOI) was $289 million, up 6% on a constant currency basis. For the full fiscal year, AOI was $981 million, up 12% on a constant currency basis. Earnings per share (EPS) came in at $0.3264, below analyst estimates of $0.65. The company's leverage ratio improved to 3.25x, its lowest level in nearly 20 years.

Publication Date: Nov -18

                                    📋 Highlights
                                    Organic Revenue Growth:
                                                Q4 revenue rose 14%, driven by 5.6% net new business growth and 96.3% client retention, with annualized gross new wins hitting $1.6B (+12% YoY).
Adjusted Operating Income (AOI):
                                                Q4 AOI reached $289M (+6% CCB), while FY25 AOI climbed to $981M (+12% CCB), reflecting margin expansion from 4.6% to 5.3%.
Debt Reduction:
                                                Leverage ratio improved to 3.25x, the lowest in nearly 20 years, supported by strong cash flow and $2.4B in cash availability.
2026 Guidance:
                                                Targets $19.45–19.85B organic revenue (7–9% growth) and $1.1–1.15B AOI (12–17% growth), with adjusted EPS projected at $2.18–2.28 (+20–25%).
Pipeline Momentum:
                                                Robust $1.6B gross new wins in FY25 and a 96.3% retention floor, with 95% as a minimum floor for FY26, underpinning growth confidence.

                                

Revenue Drivers and Outlook

The company's organic revenue growth was driven by base business growth of 3.5%, net new contribution of 1.5%, and the 53rd week adding about 2%. For FY2026, Aramark expects 3% to 4% base business growth and 4% to 5% net new contribution. The company has guided for revenue growth of 7% to 9% and AOI growth of 12% to 17%. Analysts estimate revenue growth of 5.7% for next year, indicating a relatively conservative guidance.

Margin Expansion and Cost Management

Aramark's margins have shown consistent improvement, expanding from 4.6% to 5.1% to 5.3% in FY2025, with a guidance midpoint of 5.7% for FY2026. The company expects to offset start-up costs associated with new wins through continued productivity in its supply chain and other efficiency initiatives. The company has also taken decisive action to address medical costs, particularly GLP-1s, which will significantly reduce costs year-over-year.

Valuation and Return Metrics

Aramark's current valuation metrics indicate a relatively reasonable price for its earnings and book value, with a P/E Ratio of 29.06 and P/B Ratio of 3.01. The company's return on equity (ROE) stands at 10.59%, and return on invested capital (ROIC) is 6.5%. The Net Debt / EBITDA ratio is -0.23, indicating a net cash position. The Dividend Yield is 1.17%, providing a relatively stable income stream.

Growth Prospects and Pipeline

The company has a robust pipeline, with significant opportunities for growth in its Collegiate Sports and Healthcare segments. Aramark is pursuing large university athletic programs and sees a great marketplace for growth. The company's client retention rate remains high, with a floor of 95% expected, and the company strives to do better. The competitive landscape remains strong, with an elevated level of first-time outsourcing, particularly in Higher Education and other sectors.

3. NewsRoom

Fisher Asset Management LLC Buys Shares of 846,269 Aramark $ARMK

Dec -03

Source: defenseworld.net

Aramark: Near-Term Growth Outlook Remains Uncertain

Dec -02

Source: seekingalpha.com

Aramark Correctional Services Announces Partnership with Alabama DOC: Focus on Reducing Recidivism & Increasing Efficiencies with Proprietary AI Systems

Dec -01

Source: businesswire.com

UL Solutions (NYSE:ULS) vs. Aramark (NYSE:ARMK) Financial Contrast

Nov -29

Source: defenseworld.net

Artisan Select Equity Fund Q3 2025 Portfolio Review

Nov -27

Source: seekingalpha.com

Aramark SeniorLife+ Launches Consultative Services Program: Now Providing Management Options for Senior Living Communities

Nov -18

Source: businesswire.com

Black Creek Investment Management Inc. Reduces Holdings in Aramark $ARMK

Nov -18

Source: defenseworld.net

Dow Tumbles Over 150 Points; Aramark Shares Fall After Q4 Earnings

Nov -17

Source: benzinga.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.15%)

6. Segments

Food and Support Services United States

Expected Growth: 2.5%

Aramark's Food and Support Services in the United States is driven by a 2.5% growth rate, fueled by increasing demand for outsourcing non-core services, a growing need for hospitality and facilities management in education, healthcare, and business sectors, and a focus on sustainability and wellness in food services.

Food and Support Services International

Expected Growth: 1.8%

Aramark's Food and Support Services International segment growth of 1.8% is driven by increasing demand for outsourcing services in education, healthcare, and business sectors. Additionally, strategic acquisitions, expansion into new markets, and a focus on innovative and sustainable food services also contribute to growth.

Uniform

Expected Growth: 1.2%

Aramark's Uniform segment growth of 1.2% is driven by increasing demand for customized uniforms, expansion into new markets, and strategic partnerships. Additionally, investments in digital platforms and supply chain optimization are enhancing operational efficiency, leading to cost savings and improved customer satisfaction.

7. Detailed Products

Food Services

Aramark provides food services to various industries such as education, healthcare, sports, and entertainment.

Facilities Management

Aramark offers facilities management services, including maintenance, repairs, and operations management.

Uniform Services

Aramark provides uniform rental and facility services to businesses in various industries.

Refreshment Services

Aramark offers vending, coffee, and water services to businesses and institutions.

Correctional Services

Aramark provides food and facilities management services to correctional facilities.

8. Aramark's Porter Forces

Forces Ranking

Threat Of Substitutes

Aramark's food and facilities services can be substituted with in-house services or other external providers, but the switching costs and complexity of services limit the threat of substitutes.

Bargaining Power Of Customers

Aramark's customers, including universities, hospitals, and sports venues, have significant bargaining power due to their large scale and ability to negotiate contracts.

Bargaining Power Of Suppliers

Aramark's suppliers, including food and facilities providers, have limited bargaining power due to the company's large scale and diversified supply chain.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry, including significant capital requirements and regulatory hurdles, in the food and facilities services industry.

Intensity Of Rivalry

The intensity of rivalry in the food and facilities services industry is moderate, with several large players competing for market share, but Aramark's diversified services and strong brand reputation help to mitigate the competitive pressure.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	69.91%
Debt Cost	6.44%
Equity Weight	30.09%
Equity Cost	11.56%
WACC	7.98%
Leverage	232.35%

11. Quality Control: Aramark passed 2 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Brady

A-Score: 5.9/10

Value: 3.8

Growth: 6.2

Quality: 7.6

Yield: 3.0

Momentum: 6.0

Volatility: 9.0

1-Year Total Return ->

FTAI Aviation

A-Score: 5.6/10

Value: 3.0

Growth: 4.7

Quality: 8.5

Yield: 6.0

Momentum: 5.0

Volatility: 6.7

1-Year Total Return ->

ABM Industries

A-Score: 4.9/10

Value: 5.6

Growth: 4.1

Quality: 5.2

Yield: 4.0

Momentum: 2.5

Volatility: 8.0

1-Year Total Return ->

Aramark

A-Score: 4.6/10

Value: 4.3

Growth: 4.3

Quality: 3.4

Yield: 2.0

Momentum: 5.0

Volatility: 8.7

1-Year Total Return ->

UniFirst

A-Score: 4.6/10

Value: 5.8

Growth: 4.6

Quality: 6.2

Yield: 1.0

Momentum: 3.0

Volatility: 7.0

1-Year Total Return ->

CBIZ

A-Score: 3.6/10

Value: 3.2

Growth: 5.2

Quality: 5.3

Yield: 0.0

Momentum: 2.5

Volatility: 5.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

7.97%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.98%

Aramark - US03852U1060

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on ARMK

1.c. Company Highlights

Medium Volatility

Average Quality

Average Yield

Earnings Beats

Stable Momentum

Less Volatile

Revenues Miss

Average Growth

Lower Quality

Lower Growth

Fairly Valued

Revenues Beats

Earnings Miss

2. Aramark's Strong FY2025 Results Set Stage for Continued Growth in FY2026

Revenue Drivers and Outlook

Margin Expansion and Cost Management

Valuation and Return Metrics

Growth Prospects and Pipeline

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.15%)

6. Segments

Food and Support Services United States

Expected Growth: 2.5%

Food and Support Services International

Expected Growth: 1.8%

Uniform

Expected Growth: 1.2%

7. Detailed Products

Food Services

Facilities Management

Uniform Services

Refreshment Services

Correctional Services

8. Aramark's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Aramark passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

37.77$

Current Price

37.77$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA