Aramark
ARMK
$58.88
-1.08%
Aramark is a global food service and facilities management company, providing dining, catering, and support services to schools, healthcare facilities, businesses, and entertainment venues. As one of the largest players in the specialty business services industry, Aramark differentiates itself through its scale, diversified client base, and integrated service offerings. The current investor narrative centers on the company's robust post-pandemic recovery, with strong revenue growth and margin expansion driven by increased demand across its segments. Recent attention has also focused on Aramark's ability to sustain growth amid inflationary pressures and its strategic initiatives to enhance operational efficiency and shareholder returns.…
ARMK
Aramark
$58.88
ARMK 12-Month Price Forecast
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 +15.4% versus the current price.
Average Target
$67.97
0 analysts
Implied Upside
+15.4%
vs. current price
Analyst Count
—
covering this stock
Price Range
$47 - $75
Analyst target range
The target price range is $47.00 to $75.00, indicating a wide spread of $28.00, which reflects moderate uncertainty. The high target of $75.00 assumes continued strong growth and potential multiple expansion, while the low target of $47.00 could price in margin compression or a broader economic slowdown. Recent institutional ratings show a pattern of reaffirmations rather than upgrades, suggesting analysts are confident in the company's trajectory. The wide range suggests that while the consensus is bullish, there is significant variability in expectations, which could lead to volatility.
Bulls vs Bears: ARMK Investment Factors
Aramark presents a compelling growth story with strong revenue acceleration, improving margins, and a bullish analyst consensus. However, the stock's elevated valuation, high debt, and thin margins introduce significant risks. Currently, the bull case has stronger evidence, driven by robust operational performance and positive momentum, but the key tension lies in whether the company can sustain its growth trajectory to justify the premium valuation. If revenue growth decelerates or margins fail to expand as expected, the stock could face a sharp correction.
Bullish
- Strong Revenue Growth: Q2 FY2026 revenue grew 14.68% YoY to $4.91B, accelerating from prior quarters. This momentum is driven by robust demand across U.S. and International segments, indicating a strong post-pandemic recovery.
- Significant Earnings Growth Expected: Forward PE of 21.33x vs trailing PE of 31.45x implies ~47% earnings growth expected over the next year. Analysts estimate EPS of $3.88 for the current fiscal year, up from $1.22 TTM, reflecting optimism about margin expansion.
- Strong Price Momentum: Stock is up 51.62% over the past year and 63.40% YTD, significantly outperforming the S&P 500's 20.48% gain. Trading near its 52-week high of $62.65, indicating strong investor confidence and positive market sentiment.
- Analyst Consensus is Strong Buy: With 16 analysts, the consensus rating is Strong Buy (mean 1.5). The average target price of $67.97 implies ~13.7% upside from the current price of $59.77, with a high target of $75.00 suggesting even greater potential.
Bearish
- High Valuation Relative to Growth: Trailing PE of 31.45x is elevated for a company with net margin of only 1.76%. Even with forward PE of 21.33x, the PEG ratio of 1.31 suggests the stock is not cheap relative to its growth rate, leaving limited margin of safety.
- Elevated Debt Levels: Debt-to-equity ratio of 1.82 indicates significant leverage. Interest expense of $82.2M in Q2 FY2026 consumes a large portion of operating income, making earnings sensitive to interest rate changes and increasing financial risk.
- Thin Gross Margins: Gross margin is only 5.98% in Q2 FY2026, reflecting the low-margin nature of the food service industry. This leaves little room for error; any cost inflation or pricing pressure could quickly erode profitability.
- Potential for Multiple Compression: The stock has rallied 63% YTD, and with a beta of 1.195, it is more volatile than the market. If growth decelerates or macro conditions worsen, the high valuation could compress, leading to significant downside.
ARMK Technical Analysis
Aramark's stock is in a strong uptrend, with a 1-year price change of +51.62% and a YTD gain of +63.40%. The current price of $59.77 is near the 52-week high of $62.65, representing 95.4% of the 52-week range, indicating strong momentum and investor confidence. The stock has significantly outperformed the S&P 500, which gained 20.48% over the same period, highlighting its relative strength.
Beta
1.20
1.20x market volatility
Max Drawdown
-18.4%
Largest decline past year
52-Week Range
$35-$63
Price range past year
Annual Return
+49.0%
Cumulative gain past year
| Period | ARMK Return | S&P 500 |
|---|---|---|
| 1m | +2.6% | +4.1% |
| 3m | +10.3% | +1.9% |
| 6m | +40.7% | +12.4% |
| 1y | +49.0% | +19.3% |
| ytd | +61.0% | +13.1% |
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ARMK Fundamental Analysis
Aramark's revenue growth has been robust, with the most recent quarter (Q2 FY2026) reporting revenue of $4.91 billion, a 14.68% YoY increase. This growth is driven by strong performance in both the U.S. and International segments, with U.S. revenue of $3.43 billion and International revenue of $1.48 billion. The company has consistently grown revenue over the past several quarters, from $4.28 billion in Q2 FY2025 to $4.91 billion in Q2 FY2026, indicating accelerating growth.
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
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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 21.33x, implying the market expects significant earnings growth. The gap between trailing and forward PE suggests that earnings are expected to increase by approximately 47% over the next year, reflecting optimism about margin expansion and continued revenue growth.
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 and interest expenses of $82.2M in Q2 FY2026, which consume a substantial portion of operating income. The company's thin gross margin of 5.98% leaves minimal buffer against cost inflation or pricing pressure. Additionally, the current ratio of 0.99 indicates potential liquidity concerns, as current liabilities slightly exceed current assets. However, positive free cash flow of $415.9M TTM provides some cushion for debt servicing and investments.
Market and competitive risks include valuation compression, as the stock trades at a trailing PE of 31.45x, well above the broader market average. With a beta of 1.195, the stock is more sensitive to market swings, and the recent hot CPI data has reduced the likelihood of Fed rate cuts, which could pressure high-multiple stocks. Competitive pressures in the food service industry, where margins are inherently low, could also limit pricing power and growth. The wide analyst target range ($47-$75) reflects uncertainty about future performance.
In a worst-case scenario, if revenue growth decelerates due to an economic downturn or loss of major contracts, and margins fail to expand, the stock could fall to its 52-week low of $35.07, representing a -41.3% decline from the current price of $59.77. This would be exacerbated by the company's high leverage, as earnings would be more sensitive to revenue declines. Given the stock's beta of 1.195, a market correction could amplify losses, making the downside risk substantial.