Aramark (ARMK) stock analysis

P/E above its 5-year median

Aramark's P/E of 37.9 is above its own 5-year median of 35.5.

P/E above the industry

Aramark's P/E of 37.9 is above the Eating and Drinking Places median of 28.5.

EV/EBITDA above its 5-year median

Aramark's EV/EBITDA of 14.3 is above its 5-year median of 14.1.

P/B above the industry

Aramark's price-to-book of 4.21 is above the Eating and Drinking Places median of 3.13.

Trading above fair value

The share price of $54.22 is above our fair value estimate of $46.21.

Margin of safety under 20%

The price is 17.3% above fair value, so there is no margin of safety.

Revenue growing 10%+ a year

Revenue grew 10.6% a year over the last three fiscal years.

EPS growing 10%+ a year

Diluted EPS grew 17.6% a year over the last three fiscal years.

Earnings acceleration

Needs positive net income now, a year ago and five years ago.

Growing faster than the industry

Revenue grew 11.0% over the last twelve months; the Eating and Drinking Places median is 5.9%.

Guidance raised

Aramark raised its full-year performance for Fiscal 2026 Organic Revenue growth outlook on Aug 11, 2026.

Gross margin slipping

Gross margin was 8.5% over the last twelve months, against 8.5% a year earlier.

Return on equity under 15%

Return on equity was 11.8% over the last twelve months and averaged 8.4% over five years; we look for 15% on both.

Return on capital under 10%

Return on invested capital was 7.2%, below the 10% that usually covers the cost of capital.

Return on equity above the industry

Aramark's return on equity of 11.8% is above the Eating and Drinking Places median of 7.9%.

Earnings over 5 years

Needs positive net income five years ago and in the latest year.

Net margin above its 5-year average

Net margin was 1.9% over the last twelve months, against a 5-year average of 1.6%.

Net margin below the industry

Aramark's net margin of 1.9% is below the Eating and Drinking Places median of 1.9%.

High debt

Debt is 181% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 339% five years ago to 181%.

Debt not well covered by cash flow

Operating cash flow over the last twelve months equals 14.9% of total debt; we look for at least 20%.

Interest coverage

Interest expense is not reported separately.

Short-term assets cover short-term debts

Current assets are 1.28 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 2.58; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Aramark paid dividends worth 0.9% of the share price over the last twelve months.

Yield below Treasuries

The 0.9% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Aramark yields 0.9%.

Dividend was cut

The dividend per share fell by more than 10% at least once in the last 7 fiscal years.

Covered by earnings

Dividends take 31.9% of net income.

Covered by free cash flow

Dividends take 28.3% of free cash flow.