ARMK - Embedded Expectations Analysis - 2020 12 21
Aramark (ARMK:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 61.9x Uniform P/E. At these levels, the market has relatively muted expectations for the firm. Given management's confidence in their innovation-driven growth, strong position to serve, and new delivery models, market expectations are overly bearish, and longer-term equity outperformance is likely warrantedSpecifically, management is confident in their decision to extend pickup solutions in government-sponsored meal programs for students, that innovation-driven growth will be rapid to create seamless experiences for clients, and that their uniform services will have more employees on site. In addition, they are confident that the reinitiated partnership with Sysco will enhance their capabilities and visibility, that they addressed the leadership and the sales structure issues on the food services side, and that they have a strong position to serve clients' needs throughout the rest of their company. Furthermore, they are confident in the numerous delivery models they have for clients, that they will progress new sales force hires into the rental business over a period of time, and in their ability to sustain their revenue growth
Given management's confidence about their innovation-driven growth, strong position to serve, and new delivery models, market expectations are overly pessimistic. As such, longer-term equity outperformance is likely warranted for ARMK
Aramark is a provider of food, facilities and uniform services. The company manages its Food and Support Services (FSS) business in segments split between its United States and International operations. The company's FSS segments manage a number of interrelated services-including food, hospitality, procurement and facility services-for school districts, colleges and universities, healthcare facilities, businesses, sports, entertainment and recreational venues, conference and convention centers, national and state parks and correctional institutions. The company's Uniform and Career Apparel segment provides employee uniform solution, including design, sourcing and manufacturing, delivery, cleaning and maintenance.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.