Aramark
ARMK
$56.78
-0.87%
Aramark is a global foodservice and facilities management company providing food, hospitality, and facility services to clients in education, healthcare, business, and entertainment sectors. As a leading player in the specialty business services industry, Aramark differentiates itself through its scale, with over 278,000 employees, and its focus on delivering integrated workplace solutions. The current investor narrative centers on the company's robust revenue growth and operational improvements, as evidenced by a 14.68% YoY increase in the latest quarter, alongside strategic initiatives to enhance margins and shareholder returns. Recent analyst actions, including reiterated Buy ratings from major firms, reflect growing confidence in Aramark's execution and growth trajectory.…
ARMK
Aramark
$56.78
Investment Opinion: Should I buy ARMK Today?
Based on the analysis, ARMK is rated a Buy. The company's robust revenue growth of 14.68% YoY, improving operating margins, and strong free cash flow generation support a positive outlook. The average analyst target of $67.97 implies 19.7% upside, and recent Buy ratings from major firms reinforce confidence. The forward PE of 20.26x is reasonable given the growth trajectory, and the PEG ratio of 1.31 suggests fair value relative to growth.
Sign up to view all
ARMK 12-Month Price Forecast
The AI assessment leans bullish given Aramark's strong growth metrics and improving profitability. The company's ability to generate substantial free cash flow while expanding margins is a positive sign. However, the high debt level and premium valuation temper enthusiasm. If revenue growth continues above 10% and margins hold, the stock is likely to appreciate. A downgrade would occur if growth decelerates below 10% or if debt levels become unsustainable.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Aramark's 12-month outlook, with a consensus price target around $67.97 and implied upside of +19.7% versus the current price.
Average Target
$67.97
0 analysts
Implied Upside
+19.7%
vs. current price
Analyst Count
—
covering this stock
Price Range
$47 - $75
Analyst target range
Aramark is covered by 16 analysts, with a consensus leaning bullish, as evidenced by recent actions from firms like Oppenheimer, Citigroup, and B of A Securities reiterating Buy or Outperform ratings. The average target price is $67.97, implying an upside of +19.7% from the current price of $56.78. The target range spans from a low of $47.00 to a high of $75.00, with the high target suggesting potential for further growth, possibly driven by continued margin expansion and revenue acceleration. The low target may reflect concerns about cost pressures or competitive dynamics. The relatively wide spread between low and high targets indicates moderate uncertainty, but the overall positive sentiment and recent ratings actions suggest analysts are confident in Aramark's growth story.
Drowning in data?
Find the real signal!
Bulls vs Bears: ARMK Investment Factors
Aramark presents a compelling growth story with strong revenue acceleration, improving margins, and robust cash flow. The bull case is supported by solid fundamentals and analyst optimism, while the bear case highlights high debt, low margins, and a premium valuation. Currently, the bull case appears stronger given the company's execution and growth trajectory, but the elevated debt and valuation warrant caution. The most critical tension is whether Aramark can sustain its margin expansion and revenue growth to justify its premium multiple, or if competitive pressures and cost inflation will erode profitability.
Bullish
- Strong Revenue Growth: Revenue grew 14.68% YoY in Q2 FY2026 to $4.91 billion, up from $4.28 billion in the prior-year quarter. This marks a multi-quarter trend of accelerating growth, with sequential increases from $4.63 billion in Q3 FY2025 to $4.83 billion in Q1 FY2026.
- Improving Profitability: Net income rose to $101.95 million in Q2 FY2026 from $61.85 million a year ago, a 65% increase. Operating margin expanded to 4.48% from 4.07% in the same period, indicating operational efficiency gains.
- Strong Free Cash Flow: Aramark generated $298.98 million in free cash flow in Q2 FY2026, demonstrating robust cash generation. TTM free cash flow stands at $415.95 million, supporting debt reduction and shareholder returns.
- Analyst Confidence: 16 analysts cover ARMK with an average target price of $67.97, implying 19.7% upside from the current price of $56.78. Recent actions from Oppenheimer, Citigroup, and B of A Securities reiterated Buy or Outperform ratings.
Bearish
- High Debt Levels: Debt-to-equity ratio is 1.82, which is elevated and increases financial risk. Interest expense of $82.24 million in Q2 FY2026 consumes a significant portion of operating income, limiting financial flexibility.
- Low Gross Margin: Gross margin is only 6.0% in Q2 FY2026, reflecting the capital-intensive nature of the foodservice industry. This leaves little room for cost shocks or pricing pressure.
- Premium Valuation: Forward PE of 20.26x is at a premium to the industry average, and trailing PE of 31.45x is above the midpoint of its historical range. This suggests the market is pricing in optimistic expectations that may not materialize.
- High Beta and Volatility: Beta of 1.19 indicates the stock is 19% more volatile than the market. This adds risk, especially in a rising interest rate environment where high-beta stocks tend to underperform.
ARMK Technical Analysis
Aramark's stock has demonstrated a robust long-term uptrend, with a 1-year price change of +45.07%, significantly outperforming the S&P 500's +18.65% over the same period. The current price of $56.78 sits at approximately 90.6% of its 52-week range ($35.07-$62.65), indicating the stock is trading near its highs, which suggests strong momentum but also potential overextension. The stock's beta of 1.19 implies it is 19% more volatile than the market, adding a layer of risk for investors.
Beta
1.19
1.19x market volatility
Max Drawdown
-16.4%
Largest decline past year
52-Week Range
$35-$63
Price range past year
Annual Return
+45.1%
Cumulative gain past year
| Period | ARMK Return | S&P 500 |
|---|---|---|
| 1m | -0.2% | -0.4% |
| 3m | +6.3% | +4.5% |
| 6m | +41.1% | +13.9% |
| 1y | +45.1% | +19.0% |
| ytd | +55.2% | +12.9% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
ARMK Fundamental Analysis
Aramark's revenue trajectory is robust, with the latest quarter (Q2 FY2026) reporting $4.91 billion, a 14.68% YoY increase from $4.28 billion in the prior-year quarter. This growth is part of a multi-quarter trend of accelerating revenue, as seen in sequential increases from $4.63 billion in Q3 FY2025 to $4.83 billion in Q1 FY2026. The growth is driven by both US and international segments, with US food and support services contributing $3.43 billion and international $1.48 billion. The company's profitability is improving, with net income of $101.95 million in Q2 FY2026, up from $61.85 million in the year-ago quarter, and gross margin at 6.0%, though this is relatively low due to the nature of the foodservice industry. Operating margin has expanded to 4.48% from 4.07% a year ago, indicating operational efficiency gains. Aramark's balance sheet shows a debt-to-equity ratio of 1.82, which is elevated but typical for the industry, and the company generated $298.98 million in free cash flow in Q2 FY2026, demonstrating strong cash generation. ROE stands at 10.37%, reflecting solid returns on shareholder equity.
Quarterly Revenue
$4.9B
2026-04
Revenue YoY Growth
+14.7%
YoY Comparison
Gross Margin
6.0%
Latest Quarter
Free Cash Flow
$415947000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
Open an Account, get $2 TSLA now!
Valuation Analysis: Is ARMK Overvalued?
Given Aramark's positive net income, the PE ratio is the primary valuation metric. The trailing PE is 31.45x, while the forward PE is 20.26x, indicating the market expects significant earnings growth. The gap between trailing and forward PE suggests an anticipated improvement in profitability, which aligns with the company's recent margin expansion. Compared to the industry average, Aramark's forward PE of 20.26x is at a premium to the sector, reflecting its growth prospects and market position. Historically, Aramark's PE has ranged from as low as 5.98x in Q3 FY2023 to as high as 63.86x in Q1 FY2024, with the current trailing PE of 31.45x sitting above the midpoint of this range, suggesting the market is pricing in optimistic expectations but not at extreme levels.
PE
31.5x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 6x~51x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
12.3x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks are notable, with a debt-to-equity ratio of 1.82 indicating significant leverage. Interest expense of $82.24 million in Q2 FY2026 represents a substantial burden, and any rise in interest rates could pressure earnings. The low gross margin of 6.0% leaves little buffer for cost increases, and the company's reliance on continued revenue growth to service debt is a concern. However, strong free cash flow of $298.98 million in the quarter provides some cushion, but cash flow can be volatile in this industry.
FAQ
The key risks include high debt levels with a debt-to-equity ratio of 1.82, which could strain finances if interest rates rise. Low gross margins of 6.0% make the company vulnerable to cost inflation. The stock's beta of 1.19 indicates higher volatility than the market, and its premium valuation could lead to multiple compression if growth disappoints. Additionally, competition in the foodservice industry could pressure margins.
The 12-month forecast is positive, with a base case target of $60-68 (50% probability), a bull case of $70-75 (30% probability), and a bear case of $47-55 (20% probability). The most likely scenario is steady growth, with revenue expanding at double-digit rates and margins improving. The average analyst target of $67.97 aligns with the base case, suggesting a 19.7% upside from the current price of $56.78.
ARMK's forward PE of 20.26x is at a premium to the industry average, suggesting the market expects above-average growth. The PEG ratio of 1.31 indicates that the stock is fairly valued relative to its growth rate. Historically, the trailing PE of 31.45x is above the midpoint of its range, but the forward PE suggests earnings growth will justify the valuation. Overall, the stock is not cheap, but it is not excessively overvalued given its growth prospects.
Yes, ARMK appears to be a good buy for investors with a growth-oriented portfolio. The stock offers a 19.7% upside to the average analyst target of $67.97, supported by strong revenue growth of 14.68% YoY and improving margins. However, the high debt-to-equity ratio of 1.82 and low gross margin of 6.0% are risks to consider. It is best suited for investors who can tolerate volatility and have a long-term horizon.
ARMK is more suitable for long-term investment due to its growth trajectory and improving fundamentals. The stock has a beta of 1.19, indicating higher volatility, which may not suit short-term traders. With a dividend yield of 1.08%, it offers some income, but the primary return driver is capital appreciation. A minimum holding period of 3-5 years is recommended to allow the growth story to unfold and to ride out market fluctuations.
