Stock to Buy: Aramark (ARMK)

Company Profile:

Aramark provides food, facilities, and uniform services to education, healthcare, business and industry, sports, leisure, and corrections clients in North America and internationally. The companys managed services include dining, catering, food service management, convenience-oriented retail operations, grounds and facilities maintenance, custodial, energy and construction management, and capital project management. It operates in three reportable segments: food and Support Services North America, or FSS North America, Food and Support Services International, or FSS International, and Uniform and Career Apparel, or Uniform. The company was formerly known as ARAMARK Holdings Corporation and changed its name to Aramark in May 2014. Aramark was founded in 1959 and is headquartered in Philadelphia, Pennsylvania.

Recent News:

Aramark (ARMK) has once again been named a Top 50 employer for providing a positive working environment for people with disabilities by CAREERS & the disABLED magazine.

With the National Football League’s post-season picture set, Aramark (ARMK) is proud to partner with seven of the teams that will vie for Super Bowl 50. This season, Aramark provided millions of fans attending games at Paul Brown Stadium, Sports Authority Field at Mile High, NRG Stadium, Arrowhead Stadium, TCF Bank Stadium, Heinz Field and CenturyLink Field.

Aramark reported 4Q15 sales of $3.5 billion, a fall of 10.2% from sales of $3.9 billion in 4Q14. Its net income and EPS (earnings per share) rose to $56.9 million and $0.23, respectively, in 4Q15, compared with the net income and EPS of $44.4 million and $0.18, respectively, in 4Q14. The company has declared a quarterly dividend of $0.09 per share on its common stock.

Fundamental Analysis:

Ninestocks analyzes several different financial aspects: Growth, Profitability, solvency and efficiency.

Growth – Measures the growth of both the company’s income statement and cash flow.

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Profitability – Measures the historical price movement of the stock.

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Solvency – Measures the solvency of the company based on several ratios.

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Efficiency – Measures the strength and historic growth of a company’s return on invested capital.

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Conclusion:

ARMK’s strengths can be seen in its strong growth, better profitability and better efficiency. Its net income has increased over several years. Technical indicators signal the bullish signs, as there is a bullish cross in Stochastic Oscillator. RSI is increasing to 47.58. The current P/BV ratio indicates it is undervalued compared to the average P/BV ratio of the industry and the sector. We rate Aramark (ARMK) a Strong BUY.