Aramark (ARMK) Margins Improve to 1.8%, Reinforcing Bullish Narratives on Profitability

Aramark (ARMK) just posted its fourth quarter results for FY 2025, reporting revenue of $5.0 billion and basic EPS of $0.33, with net income at $87.1 million. Over the past year, the company has seen total revenue climb from $17.4 billion to $18.5 billion. EPS moved up from $1.00 to $1.24. Profit margins ticked up as well, setting up an interesting backdrop for investors weighing growth prospects against financial discipline.

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Now, let's see how these numbers line up with the major narratives and expectations shaping market sentiment for Aramark.

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Margin Expansion: 1.8% Net Profit Beats Prior Year

• Net profit margins climbed to 1.8% for the trailing twelve months, up from 1.5% the prior year. This highlights a tangible improvement in operational efficiency.
• Consensus narrative notes that this progress is supported by technology investments and innovative, health-focused offerings. These factors are helping drive year-over-year adjusted operating income gains and positioning Aramark to capture more earnings as new sector contracts, such as Education and Healthcare, come online.
  • Analysts highlight the 60 basis point margin boost as evidence that dynamic menu planning and supply chain upgrades are contributing to bottom-line growth. Elevated client retention in key markets signals durability.
  • The improvement in net margin, though still thin for the sector, supports the consensus view that margin expansion is becoming a structural tailwind rather than a one-off gain.

It remains to be seen whether this performance can outpace industry competition given Aramark’s unique blend of innovation and sector diversification. 📈 Read the full Aramark Consensus Narrative. 📊 Read the full Aramark Consensus Narrative.

Share Price Tops DCF Fair Value by 18%

• Aramark's share price is $37.30, trading roughly 18% above its estimated DCF fair value of $31.73. It is still below the only permitted analyst price target figure of $44.60.
• Consensus narrative points out that while earnings are forecast to grow at a robust 20.3% per year, the current 30x P/E ratio is elevated for the US Hospitality sector. This suggests investors are pricing in rapid future improvement that has not yet reached the sector’s consistent long-term average.
  • With forecasted earnings approaching $695 million by 2028 and shares expected to gradually trade on a lower future P/E, there is tension between current optimism and the rate at which fundamentals can catch up.
  • The price-to-earnings premium over industry average keeps long-term focus on Aramark’s need to deliver profit growth and scale margin gains as expected.

Revenue Growth Lags Market, But Outlook Outpaces Sector

• Analysts expect Aramark’s revenue to rise by 5.8% per year, which is slower than the US market’s 10.5%. However, it still indicates stable top-line increases due to strategic contract wins and international expansion.
• Consensus narrative emphasizes that double-digit organic growth in regions like the UK, Chile, and Spain, paired with high client retention in Education, gives Aramark a diversification advantage not easily matched by US-centric peers.
  • Despite the slower headline revenue growth, the consensus view sees ongoing sector expansion and urbanization in education and sports steadily fueling overall momentum for several years.
  • Outperformance in high-retention segments helps mitigate exposure to cyclical end markets, reinforcing analysts’ positive outlook for future profit stability.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Aramark on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

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A great starting point for your Aramark research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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While Aramark's revenue is growing, it lags the broader market and relies on optimistic projections to justify a stretched valuation multiple.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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