Stock of the Day

February 6, 2020

Aramark (ARMK)

$56.55
+$0.24 (+0.4%)
Market Cap: $14.84B

About Aramark

Aramark provides food and facilities services to education, healthcare, business and industry, sports, leisure, and corrections clients in the United States and internationally. It operates through two segments, Food and Support Services United States, and Food and Support Services International. The company offers food-related managed services, including dining, catering, food service management, and convenience-oriented retail services; non-clinical food and food-related support services, such as patient food and nutrition, retail food, environmental services, 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, capital program management, payment services, 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, it offers correctional food; and operates commissaries, laundry facilities, and property rooms. It primarily serves business and industry, sports, leisure and corrections, education, healthcare, public institutions, manufacturing, transportation, service, and other industries. The company was formerly known as ARAMARK Holdings Corporation. Aramark was founded in 1959 and is based in Philadelphia, Pennsylvania.

Today's Trend

Aramark (NYSE: ARMK) shares have climbed to a new 52-week high as investors respond to strong quarterly results, upbeat growth expectations and a series of bullish analyst actions. The stock is trading well above its 50-day and 200-day moving averages, although its elevated valuation increases the risk of volatility.

  • Strong quarterly performance: Aramark reported quarterly revenue of $5.06 billion, ahead of the $4.94 billion consensus estimate, while earnings per share of $0.52 exceeded expectations of $0.48. Revenue increased 9.3% year over year, and EPS rose from $0.40 in the comparable period. Aramark surprises with second-quarter sales
  • Analyst price-target increases: JPMorgan raised its target from $55 to $70 and assigned an “overweight” rating. Stifel lifted its target from $54 to $70 with a “buy” rating, while Robert W. Baird raised its target from $63 to $69 and maintained an “outperform” rating. These targets imply continued upside from recent trading levels. Analyst price-target actions
  • Growth outlook remains favorable: Management’s fiscal 2026 guidance calls for EPS of $2.18 to $2.28. Analysts highlighted expected organic revenue growth of roughly 9% to 10% and adjusted EPS growth of 20% to 25%, supported by new business wins and expansion in U.S. and international operations.
  • AI infrastructure opportunity: Aramark Nexus is pursuing contracts with hyperscale data centers and large industrial projects, creating a potential new source of food-service and facilities-management growth as AI infrastructure expands. Jim Cramer’s AI-related Aramark pick
  • Valuation concerns: A recent analysis argued that Aramark’s rapid share-price advance warrants caution, particularly given its high earnings multiple and the possibility that strong growth expectations are already reflected in the stock. Aramark valuation analysis
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