Is Aramark (ARMK) positioned for future growth?

Aramark (NYSE: ARMK) stock jumped 1.14% on Thursday to $39.02 against a previous-day closing price of $38.58. With 1.79 million shares changed hands, the volume of the stock remained lighter than its average volume of 3.77 million shares. During the session, the Specialty Business Services company that operates in wider Industrials sector, reached to the highest price of $39.35 whereas the lowest price it dropped to was $38.51. The 52-week range on ARMK shows that it touched its highest point at $45.72 and its lowest point at $28.74 during that stretch. It currently has a 1-year price target of $43.42. With its current market cap of 10.29 billion, ARMK has annualized dividend of $0.44 while the current yield stands at 1.13%. Beta for the stock currently stands at 1.62.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of ARMK was down-trending over the past week, with a drop of -2.45%, but this was up by 16.62% over a month. Three-month performance surged to 4.05% while six-month performance fell -3.22%. The stock gained 22.90% in the past year, while it has lost -5.61% so far this year. A look at the trailing 12-month EPS for ARMK yields 0.94 with Next year EPS estimates of 2.41. For the next quarter, that number is 0.34. This implies an EPS growth rate of 286.00% for this year and 39.31% for next year. EPS is expected to grow by 35.20% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of -12.80%.

Float and Shares Shorts:

At present, 260.67 million ARMK shares are outstanding with a float of 256.55 million shares on hand for trading. On May 14, 2023, short shares totaled 11.35 million, which was 4.35% higher than short shares on Apr 13, 2023. In addition to Mr. John J. Zillmer as the firm’s CEO & Director, Mr. Thomas G. Ondrof serves as its Exec. VP & CFO.

Institutional Ownership:

Through their ownership of 107.55% of ARMK’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 60.24% of ARMK, in contrast to 47.68% held by mutual funds. Shares owned by individuals account for 15.98%. As the largest shareholder in ARMK with 12.90% of the stake, Capital Research & Management Co holds 33,614,232 shares worth 33,614,232. A second-largest stockholder of ARMK, The Vanguard Group, Inc., holds 24,953,418 shares, controlling over 9.58% of the firm’s shares. BlackRock Fund Advisors is the third largest shareholder in ARMK, holding 20,635,314 shares or 7.92% stake. With a 6.06% stake in ARMK, the American Balanced Fund is the largest stakeholder. A total of 15,795,308 shares are owned by the mutual fund manager. The American Funds Insurance Series -, which owns about 4.37% of ARMK stock, is the second-largest Mutual Fund holder. It holds 11,375,152 shares valued at 394.72 million. Eaton Vance Atlanta Capital SMID holds 3.44% of the stake in ARMK, owning 8,971,146 shares worth 311.3 million.

An Overview of Recent Financials:

Understanding a company as a customer does not mean you will understand it as an investor. The wise investor uses quantitative research to analyze metrics such as revenue, net income, and earnings. In its fiscal quarter reported on Mar 30, 2023, ARMK reported revenue of $4.13B and operating income of $147.89M. The EBITDA in the recently reported quarter was $280.86M and diluted EPS was $0.16.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for ARMK since 0 analysts follow the stock currently. In the same way, a target price assigned to a stock can also reveal much about its potential. With ARMK analysts setting a high price target of $50.00 and a low target of $36.00, the average target price over the next 12 months is $43.23. Based on these targets, ARMK could surge 28.14% to reach the target high and fall by -7.74% to reach the target low. Reaching the average price target will result in a growth of 10.79% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy.

Summary of Insider Activity:

Insiders traded ARMK stock several times over the past three months with 16 Buys and 2 Sells. In these transactions, 2,085 shares were bought while 425 shares were sold. The number of buy transactions has increased to 85 while that of sell transactions has risen to 33 over the past year. The total number of shares bought during that period was 172,289 while 100,065 shares were sold.

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