ARAMARK Holdings Received its Third Buy in a Row

By Carrie Williams

After Credit Suisse and RBC Capital assigned a Buy rating to ARAMARK Holdings in the last month, the company received another Buy, this time from Barclays. Analyst Manav Patnaik reiterated a Buy rating on ARAMARK Holdings (NYSE: ARMK) yesterday and set a price target of $38. The company’s shares opened today at $33.16.

Patnaik commented:

“We lower our PT to $38 (18x CY18 EPS). While we understand investor frustration around today’s results, ARMK is trading at what see as a reasonable valuation (15x FY18 EPS)… especially given its visibility into self-help initiatives to deliver its targeted $2.20 EPS (i.e. continued levers on cost side should revenues be weaker). For those with a LT horizon, we still view ARMK’s results as more bad optics than bad performance.”

According to TipRanks.com, Patnaik is a 5-star analyst with an average return of 8.8% and a 64.1% success rate. Patnaik covers the Services sector, focusing on stocks such as Corporate Executive Board, Kar Auction Services Inc, and Nord Anglia Education.

Currently, the analyst consensus on ARAMARK Holdings is Strong Buy and the average price target is $38.50, representing a 16.1% upside.

In a report released yesterday, Credit Suisse also reiterated a Buy rating on the stock with a $39 price target.

ARAMARK Holdings’ market cap is currently $8.07B and has a P/E ratio of 31.27. The company has a book value ratio of 3.8624.

Based on the recent corporate insider activity of 133 insiders, corporate insider sentiment is negative on the stock. Most recently, in August 2016, Stephen Reynolds, the EVP, GC & Sec of ARMK sold 56,709 shares for a total of $2,095,965.

Aramark engages in the provision of food, facilities, and uniform services to education, healthcare, business, sports, leisure, and corrections clients. It operates through the following segments: Food and Support Services North America; Food and Support Services International; Uniform & Career Apparel. The Food and Support Services North America segment provides food and facilities services to colleges, universities, schools, hospitals, nursing homes, offices, concert venues, and correctional facilities in North America. The Food and Support Services International segment offers dining, catering, and facilities management services to schools, hospitals, nursing homes, office parks and buildings, arenas, stadiums, and correctional centers in the United Kingdom, Germany, Chile, China, and Ireland. The Uniform & Career Apparel segment designs, manufactures, and delivers uniforms and work clothes. The company was founded in 1959 and is headquartered in Philadelphia, PA.