Critical Contrast: Aramark (ARMK) and Its Peers

Aramark (NYSE: ARMK) is one of 56 publicly-traded companies in the “Eating places” industry, but how does it contrast to its peers? We will compare Aramark to related companies based on the strength of its valuation, dividends, analyst recommendations, risk, earnings, institutional ownership and profitability.

Analyst Ratings

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This is a breakdown of recent recommendations for Aramark and its peers, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Aramark 0 2 5 0 2.71
Aramark Competitors 520 2637 2962 121 2.43

Aramark presently has a consensus price target of $47.43, indicating a potential upside of 25.54%. As a group, “Eating places” companies have a potential upside of 7.01%. Given Aramark’s stronger consensus rating and higher probable upside, research analysts clearly believe Aramark is more favorable than its peers.

Valuation & Earnings

This table compares Aramark and its peers gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Aramark $14.60 billion $373.92 million 21.34
Aramark Competitors $1.91 billion $185.15 million 18.99

Aramark has higher revenue and earnings than its peers. Aramark is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Insider & Institutional Ownership

94.7% of Aramark shares are owned by institutional investors. Comparatively, 67.5% of shares of all “Eating places” companies are owned by institutional investors. 3.3% of Aramark shares are owned by company insiders. Comparatively, 17.3% of shares of all “Eating places” companies are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Aramark pays an annual dividend of $0.42 per share and has a dividend yield of 1.1%. Aramark pays out 23.7% of its earnings in the form of a dividend. As a group, “Eating places” companies pay a dividend yield of 2.2% and pay out 50.5% of their earnings in the form of a dividend. Aramark has raised its dividend for 3 consecutive years.

Risk & Volatility

Aramark has a beta of 0.64, suggesting that its share price is 36% less volatile than the S&P 500. Comparatively, Aramark’s peers have a beta of 0.55, suggesting that their average share price is 45% less volatile than the S&P 500.

Profitability

This table compares Aramark and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Aramark 3.65% 18.68% 4.07%
Aramark Competitors 3.39% -3.65% 5.16%

Summary

Aramark beats its peers on 11 of the 15 factors compared.

Aramark Company Profile

Aramark provides food, facilities, and uniform services to education, healthcare, business and industry, sports, leisure, and corrections clients in North America and internationally. The company operates through three segments: Food and Support Services North America, Food and Support Services International, Uniform and Career Apparel. It offers managed services include dining, catering, food service management, convenience-oriented retail operations, grounds and facilities maintenance, custodial, energy and construction management, and capital project management. The company also provides non-clinical support services, such as patient food and nutrition, retail food, and procurement services; and facilities services comprising clinical equipment maintenance, environmental, plant operations, energy and supply chain management, and purchasing. In addition, it offers on-site restaurants, catering, convenience stores, and executive dining services; beverage and vending services; and facility management services comprising housekeeping, plant operations and maintenance, energy management, grounds keeping, landscaping, transportation, capital program management and commissioning, and other facility consulting services. Further, the company provides facility and business support services banquet and catering, retail and merchandise sales, recreational and lodging, and facility management services for sports, entertainment, and recreational facilities. Additionally, it offers correctional food, and food and facilities management services for parks; and operates commissaries, laundry facilities, and property rooms. It also rents, sells, cleans, maintains, and delivers uniform and career apparel, and other textile items; and provides other garments and work clothes, as well as ancillary items. The company was formerly known as ARAMARK Holdings Corporation and changed its name to Aramark in May 2014. Aramark was founded in 1959 and is based in Philadelphia, Pennsylvania.

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