Time To Worry? Analysts Are Downgrading Their Aramark (NYSE:ARMK) Outlook

Market forces rained on the parade of Aramark (NYSE:ARMK) shareholders today, when the analysts downgraded their forecasts for next year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following the downgrade, the consensus from three analysts covering Aramark is for revenues of US$17b in 2024, implying a noticeable 6.3% decline in sales compared to the last 12 months. Statutory earnings per share are anticipated to tumble 29% to US$1.49 in the same period. Prior to this update, the analysts had been forecasting revenues of US$20b and earnings per share (EPS) of US$2.10 in 2024. Indeed, we can see that the analysts are a lot more bearish about Aramark's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Aramark

It'll come as no surprise then, to learn that the analysts have cut their price target 29% to US$32.56.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 5.1% by the end of 2024. This indicates a significant reduction from annual growth of 0.3% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 11% annually for the foreseeable future. It's pretty clear that Aramark's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Aramark's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Aramark.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Aramark analysts - going out to 2026, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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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.