Aramark (ARMK): Analysts Giving Thumbs Up or Thumbs Down?

Here’s how investors should make decisions about buying, holding or selling Aramark (NYSE:ARMK) stock. On Friday, shares of Aramark (NYSE:ARMK) closed lower after an active session. The shares dropped -1.39 points or -4.17 percent at $31.98 with a light trade volume of 3.034 million shares. After opening the session at $33.13, the shares went as high as $33.3 and as low as $31.87, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $8.22 billion and now has 257 million shares outstanding. Aramark (ARMK) stock has gained 5.65 percent of market value in 21 trading days.

ARMK stock has a trailing 3-year beta of 1.14, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was $1.91 a share in the trailing twelve months. The stock’s value has surged 10.39 percent year to date (YTD) against a decline of -23.8 percent in 12 month’s time. The company’s shares still trade -26.82 percent away from its 1-year high of $43.70 and 16.84 percent up from 52-week low of $27.37. The average consensus rating on the company is 1.9, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a buy.

Aramark (ARMK) will probably climb 30.86 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $48 price as 12-month high target. This represents a whopping 50.09 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $41, which represents a return potential of 28.21 percent when compared to the closing price of the stock of $31.98 on Friday, February 08. The lowest price target for the stock is $35 — slightly more than 9.44 percent from ARMK’s current share price.

History has shown that shares in Aramark have gone up on 12 different earnings reaction days and are predicted to add 0.03 percent when the company reports upcoming earnings. Investors will get their next glimpse of ARMK’s Q2 earnings on May 06. Analysts are forecasting revenue to climb 6 percent to $4.2B in the fiscal second quarter, while earnings are seen soaring by nearly 3.39 percent to $0.61 per share. It earned $0.7 per share, worse than the $0.71, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $4.27B, better than the $4.19B analysts expected. Earnings are estimated to increase by -12.3 percent this year, 12.43 percent next year and continue to increase by 11.2 percent annually for the next 5 years.

Let’s take a look at some insider activity at Aramark (NYSE:ARMK) and see the pattern. The earliest insider trade took place on 12/13/2018. Sadove Stephen I gathered a total of 6 thousand shares of company at average share price of $32.72. The total for the purchase was set at $196.32 thousand. After this transaction, the Director account balance stood at 37.31 thousand shares. The stock lost -2.26 percent since that insider purchase. On 12/12/2018, Foss Eric J, Chairman, President and CEO, purchased 92.56 thousand shares at a price per share of $32.46. This added 3 million shares to the insider’s fortune and the stock saw a -1.48 percent retreat in value since the news became public. This transaction left 1.68 million shares in the Chairman, President and CEO account.

On 08/29/2018, EVP, GC and Secretary Reynolds Stephen R performed a sale transaction worth $619.95 thousand. This sale at $41.33 each has eliminated 15 thousand shares from the insider’s portfolio position. Meanwhile, shares have recorded -22.62 percent decrease since the transaction was reported. The insider now is left with 47.17 thousand shares remaining in the account. Mehra Sanjeev K, who performs the Director job, bought 19.64 thousand shares for $800.33 thousand. The acquisition occurred on 11/16/2017 was priced at $40.75 per share. The share price plunged -21.52 percent since the reporting date. Mehra Sanjeev K now left with a stake of 48.26 thousand ARMK stock worth $1.54 million after the insider buying.

The stock is currently hovering around the first support level of $31.47. Below this, the next support is placed in the zone of $30.95. Till the time, the ARMK stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 45.07 on daily chart, which may remain a cause for concern. If the price breaks below $30.95 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $32.9 mark may result into a pull-back move towards $33.81 level.

Shares of Aramark (ARMK) are trading at a P/E ratio of 16.76 times earnings reported for the past 12 months. The industry ARMK operates in has an average P/E of 60.98. Its P/E ratio went as low as 27.32X and as high as 42.15 over the 5-year span.Further, it is sporting a 0.51 on the Price-to-Sales ratio. Compare this with the industry average P/S of 3.18. 11.3 percent is the gross profit margin for Aramark and operating margin sits at 6.1 percent. Along with this, the net profit margin is 3.3 percent.