At US$40.76, Is It Time To Put Aramark (NYSE:ARMK) On Your Watch List?

Let's talk about the popular Aramark (NYSE:ARMK). The company's shares saw a decent share price growth of 13% on the NYSE over the last few months. The company is now trading at yearly-high levels following the recent surge in its share price. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine Aramark’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Aramark

What's The Opportunity In Aramark?

The stock is currently trading at US$40.76 on the share market, which means it is overvalued by 21% compared to our intrinsic value of $33.78. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Since Aramark’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Aramark generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to more than double over the next couple of years, the future seems bright for Aramark. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? ARMK’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe ARMK should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on ARMK for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for ARMK, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Aramark, you'd also look into what risks it is currently facing. For example, Aramark has 2 warning signs (and 1 which is potentially serious) we think you should know about.

If you are no longer interested in Aramark, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.