Food services company Aramark's Q3 revenue just short of estimates, Adjusted EPS meets expectations

Overview

• Aramark fiscal Q3 revenue up 6% yr/yr to $4.626 bln, missing estimates

• Adjusted EPS for fiscal Q3 meets analyst expectations, rising 29% yr/yr

• Operating income increased 13% yr/yr, driven by supply chain expansion

• The food service and facilities provider highlights significant client wins, retention rate exceeds 97%

Outlook

• Aramark expects FY25 organic revenue growth of 7.5% to 9.5%

• Company anticipates FY25 adjusted EPS growth of 23% to 28%

• Aramark projects FY25 adjusted operating income growth of 15% to 18%

• Company expects leverage ratio to reach ~3.0x by end of FY25

Result Drivers

• REVENUE GROWTH - Driven by strong base business volume, new client wins, and high retention rates

• SUPPLY CHAIN OPTIMIZATION - Expanded capabilities and AI-driven technology enhanced profitability

• SEGMENT PERFORMANCE - FSS US growth from new client wins and expanded services; FSS International broad-based growth

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 12 "strong buy" or "buy", 3 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the restaurants & bars peer group is "buy"

• Wall Street's median 12-month price target for Aramark is $45.00, about 4.2% above its August 4 closing price of $43.11

• The stock recently traded at 20 times the next 12-month earnings vs. a P/E of 16 three months ago

Press Release: