NYSE:ARMK

Stock Analysis Report

Executive Summary

Aramark provides food, facilities, and uniform services to education, healthcare, business and industry, sports, leisure, and corrections clients in North America and internationally.


Snowflake Analysis

Unattractive dividend payer with concerning outlook.


Similar Companies

Share Price & News

How has Aramark's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: ARMK has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

3.4%

ARMK

3.4%

US Hospitality

2.0%

US Market


1 Year Return

45.6%

ARMK

19.2%

US Hospitality

23.6%

US Market

Return vs Industry: ARMK exceeded the US Hospitality industry which returned 20.1% over the past year.

Return vs Market: ARMK exceeded the US Market which returned 24.7% over the past year.


Shareholder returns

ARMKIndustryMarket
7 Day3.4%3.4%2.0%
30 Day6.3%5.3%3.9%
90 Day4.5%16.0%12.0%
1 Year47.4%45.6%22.3%19.2%26.2%23.6%
3 Year45.0%40.1%47.3%37.4%53.2%43.3%
5 Year53.0%44.6%56.6%40.0%75.7%56.3%

Price Volatility Vs. Market

How volatile is Aramark's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Aramark undervalued compared to its fair value and its price relative to the market?

25.55x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: ARMK ($45.73) is trading above our estimate of fair value ($44.36)

Significantly Below Fair Value: ARMK is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: ARMK is poor value based on its PE Ratio (25.2x) compared to the Hospitality industry average (25.1x).

PE vs Market: ARMK is poor value based on its PE Ratio (25.2x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: ARMK is poor value based on its PEG Ratio (2.5x)


Price to Book Ratio

PB vs Industry: ARMK is overvalued based on its PB Ratio (3.4x) compared to the US Hospitality industry average (2.4x).


Next Steps

Future Growth

How is Aramark forecast to perform in the next 1 to 3 years based on estimates from 12 analysts?

8.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ARMK's forecast earnings growth (10.1% per year) is above the savings rate (1.7%).

Earnings vs Market: ARMK's earnings (10.1% per year) are forecast to grow slower than the US market (14.3% per year).

High Growth Earnings: ARMK's earnings are forecast to grow, but not significantly.

Revenue vs Market: ARMK's revenue (3.5% per year) is forecast to grow slower than the US market (7.5% per year).

High Growth Revenue: ARMK's revenue (3.5% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: ARMK's Return on Equity is forecast to be low in 3 years time (15.9%).


Next Steps

Past Performance

How has Aramark performed over the past 5 years?

22.9%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: ARMK has a large one-off gain of $135.3M impacting its September 27 2019 financial results.

Growing Profit Margin: ARMK's current net profit margins (2.8%) are lower than last year (3.6%).


Past Earnings Growth Analysis

Earnings Trend: ARMK's earnings have grown significantly by 22.9% per year over the past 5 years.

Accelerating Growth: ARMK's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: ARMK had negative earnings growth (-20.9%) over the past year, making it difficult to compare to the Hospitality industry average (-18.9%).


Return on Equity

High ROE: ARMK's Return on Equity (13.5%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Aramark's financial position?


Financial Position Analysis

Short Term Liabilities: ARMK's short term assets ($2.7B) do not cover its short term liabilities ($2.7B).

Long Term Liabilities: ARMK's short term assets ($2.7B) do not cover its long term liabilities ($7.7B).


Debt to Equity History and Analysis

Debt Level: ARMK's debt to equity ratio (197.5%) is considered high.

Reducing Debt: ARMK's debt to equity ratio has reduced from 314.7% to 197.5% over the past 5 years.

Debt Coverage: ARMK's debt is not well covered by operating cash flow (15%).

Interest Coverage: ARMK's interest payments on its debt are not well covered by EBIT (2.3x coverage).


Balance Sheet

Inventory Level: ARMK has a low level of unsold assets or inventory.

Debt Coverage by Assets: ARMK's debt is not covered by short term assets (assets are 0.4x debt).


Next Steps

Dividend

What is Aramark's current dividend yield, its reliability and sustainability?

0.95%

Current Dividend Yield


Dividend Yield vs Market

company0.9%marketbottom25%1.4%markettop25%3.7%industryaverage2.8%forecastin3Years1.1%

Current dividend yield vs market & industry

Notable Dividend: ARMK's dividend (0.96%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: ARMK's dividend (0.96%) is low compared to the top 25% of dividend payers in the US market (3.66%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, ARMK has been paying a dividend for less than 10 years.

Growing Dividend: ARMK's dividend payments have increased, but the company has only paid a dividend for 6 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (24.2%), ARMK's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: ARMK's dividends in 3 years are forecast to be well covered by earnings (17.7% payout ratio).


Next Steps

Management

What is the CEO of Aramark's salary, the management and board of directors tenure and is there insider trading?

7.3yrs

Average management tenure


CEO

John Zillmer (64yo)

0.3yrs

Tenure

0

Mr. John J. Zillmer serves as Chief Executive Officer and Director at Aramark since October 6, 2019. He serves as an Adviser of CVC Capital Partners Limited. Mr. Zillmer served as the Executive Chairman of ...


Management Age and Tenure

7.3yrs

Average Tenure

55yo

Average Age

Experienced Management: ARMK's management team is seasoned and experienced (7.3 years average tenure).


Board Age and Tenure

0.3yrs

Average Tenure

63yo

Average Age

Experienced Board: ARMK's board of directors are not considered experienced ( 0.3 years average tenure), which suggests a new board.


Insider Trading

Insider Buying: ARMK insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyUS$1,493,85322 Nov 19
John Zillmer
EntityIndividual
Role
Chief Executive Officer
CEO & Director
Shares35,000
Max PriceUS$42.68
SellUS$280,52716 Aug 19
Keith Bethel
EntityIndividual
Role
Senior Key Executive
Chief Growth Officer
Shares7,500
Max PriceUS$37.40
BuyUS$99,86514 Feb 19
Stephen Bramlage
EntityIndividual
Role
Senior Key Executive
Executive Advisor
Shares3,195
Max PriceUS$31.26

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • John Zillmer (64yo)

    CEO & Director

    • Tenure: 0.3yrs
  • Felise Kissell

    Vice President of Investor Relations & Corporate Affairs

    • Lynn McKee (64yo)

      Executive Vice President of Human Resources

      • Tenure: 15.7yrs
      • Compensation: US$2.92m
    • Tom Ondrof (55yo)

      Executive VP & CFO

      • Joe Munnelly (55yo)

        Chief Accounting Officer (Leave of Absence)

        • Tenure: 12.3yrs
        • Compensation: US$2.00m
      • Brent Franks

        Chief Operating Officer of International

        • Tenure: 7.3yrs
      • Steve Bramlage (49yo)

        Executive Advisor

        • Compensation: US$4.51m
      • Danna Vetter

        Chief Marketer

        • Keith Bethel (52yo)

          Chief Growth Officer

          • Compensation: US$2.41m
        • Lauren Harrington (44yo)

          Senior VP & General Counsel

          • Tenure: 0.8yrs
          • Compensation: US$2.08m

        Board Members

        • Steve Sadove (67yo)

          Non-Executive Independent Chairman & Lead Independent Director

          • Tenure: 0.4yrs
          • Compensation: US$328.64k
        • Rick Dreiling (66yo)

          Independent Director

          • Tenure: 3.9yrs
          • Compensation: US$260.00k
        • Calvin Darden (69yo)

          Independent Director

          • Tenure: 2yrs
          • Compensation: US$260.15k
        • Dan Heinrich (63yo)

          Independent Director

          • Tenure: 6.2yrs
          • Compensation: US$292.73k
        • Ivey Cameron (60yo)

          Independent Director

          • Tenure: 0.3yrs
        • John Zillmer (64yo)

          CEO & Director

          • Tenure: 0.3yrs
        • Art Winkleblack (62yo)

          Independent Director

          • Tenure: 0.3yrs
        • Irene Esteves (60yo)

          Independent Director

          • Tenure: 4.9yrs
          • Compensation: US$280.00k
        • Karen King (63yo)

          Independent Director

          • Tenure: 0.3yrs
        • Paul Hilal (52yo)

          Independent Vice Chairman of the Board

          • Tenure: 0.3yrs

        Company Information

        Aramark's company bio, employee growth, exchange listings and data sources


        Key Information

        • Name: Aramark
        • Ticker: ARMK
        • Exchange: NYSE
        • Founded: 1959
        • Industry: Restaurants
        • Sector: Consumer Services
        • Market Cap: US$11.600b
        • Shares outstanding: 249.88m
        • Website: https://www.aramark.com

        Number of Employees


        Location

        • Aramark
        • 2400 Market Street
        • Philadelphia
        • Pennsylvania
        • 19103
        • United States

        Listings

        TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
        ARMKNYSE (New York Stock Exchange)YesCommon StockUSUSDDec 2013
        0AKDB (Deutsche Boerse AG)YesCommon StockDEEURDec 2013
        0HHBLSE (London Stock Exchange)YesCommon StockGBUSDDec 2013

        Biography

        Aramark provides food, facilities, and uniform services to education, healthcare, business and industry, sports, leisure, and corrections clients in North America 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 managed services, including dining, catering, food service management, and convenience-oriented retail operations; 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 food and facilities management services for parks; 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. 


        Company Analysis and Financial Data Status

        All financial data provided by Standard & Poor's Capital IQ.
        DataLast Updated (UTC time)
        Company Analysis2020/01/19 00:34
        End of Day Share Price2020/01/17 00:00
        Earnings2019/09/27
        Annual Earnings2019/09/27


        Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.