Quick Look at Aramark (ARMK)

Aramark logged a 0.91% change Friday, and is now trading at a price of $37.52 per share.

Aramark shares moved 5.52% over the last 52 weeks, with a high of $45.59 and a low of $28.5. During this time, the stock outperformed the S&P 500 index by 9.22%. As of January 2022, the company's 50-day average price is $42.0. Aramark provides uniform food, facilities, and services to education, health, business and industrial, sports, recreation, and correctional clients in the United States and internationally. The mid-cap Industrials company is based in Philadelphia, PA. Aramark has returned a 1.19% dividend yield over the last 12 months.

Snapshot of the Company's Weak Operating Margins:

2019-09-30 2020-09-30 2021-09-30 2022-09-30
Revenue (MM) $16,026 $12,438 $11,818 $15,942
Revenue Growth n/a -22.39% -4.98% 34.89%
Gross Margins 4.3% -2.37% 2.16% 3.98%
Gross Margins Growth n/a -155.12% 191.14% 84.26%
Operating Margins 5.56% -2.13% 1.62% 3.94%
Operating Margins Growth n/a -138.31% 176.06% 143.21%
Earnings Per Share $1.81 -$1.82 -$0.35 $0.75
EPS Growth n/a -200.55% 80.77% 314.29%
Diluted Shares (MM) 248 253 256 259
Free Cash Flow (MM) $481 -$242 $249 $306
FCF Growth n/a -150.26% 203.07% 22.8%
Capital Expenditures (MM) $503 $419 $408 $388
Net Debt / EBITDA 6.27 -62.96 16.39 9.26

Aramark Is Too Expensive at Current Levels:

Compared to the Industrials sector's average of 20.49, Aramark has a trailing twelve month P/E ratio of 43.13 and, according to its EPS guidance of 2.44, an expected P/E ratio of 15.38.

However, Aramark is likely undervalued in terms of its equity because its P/B ratio is 3.643 compared to its sector average of 3.78. The company's shares are currently trading 209.83% above their fair value as expressed by Benjamin Graham's formula:

√(22.5 * 5-year average EPS * book value per share) = √(22.5 * 0.54 * 12.07) = $12.11

13 analysts are following Aramark and have set target prices ranging from $36.0 to $55.0 per share. On average, they have given the company a rating of buy. At the current price of $37.52, ARMK is trading -15.89% away from its average analyst target price of $44.61 per share, implying an analyst consensus of some upside potential for the stock.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.