Aramark Holdings (NYSE:ARMK) is a large cap company that operates within the hotels, restaurants and leisure industry. Its market cap is $11 billion today, and the total one-year return is 15.72% for shareholders.
Aramark stock is underperforming the market. It's beaten down, but it reports earnings soon. So is it a good time to buy? To answer this question, we've turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.
Our system looks at six key metrics...
✓ Earnings-per-Share (EPS) Growth: Aramark reported a recent EPS growth rate of 50%. That's above the hotels, restaurants and leisure industry average of 46.29%. That's a great sign. Aramark's earnings growth is outpacing that of its competitors.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the hotels, restaurants and leisure industry is 32.84. And Aramark's ratio comes in at 28.06. It's trading at a better value than many of its competitors.
✗ Debt-to-Equity : The debt-to-equity ratio for Aramark stock is 236.4%. That's above the hotels, restaurants and leisure industry average of 194.4%. That's not a good sign. Aramark's debt levels should be lower.
✗ Free Cash Flow per Share Growth : Aramark's FCF has been lower than that of its competitors over the last year. That's not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It's one of our most important fundamental factors.
✗ Profit Margins : The profit margin of Aramark comes in at 1.82% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Aramark's profit margin is below the hotels, restaurants and leisure average of 8.75%. So that's a negative indicator for investors.
✗ Return on Equity : Return on equity tells us how much profit a company produces with the money shareholders invest. The ROE for Aramark is 15.6%, and that's below its industry average ROE of 22.27%.
Aramark stock passes two of our six key metrics today. That's why our Investment U Stock Grader rates it as a Hold With Caution.