Valens Equity Weekly Insights - 2023 01 17
Aramark (ARMK) managed to survive during the pandemic, and now it has an opportunityto further consolidate the $900 billion food, facilities, and uniform management industry.
Uniform Accounting highlights that the market is not pricing in this recovery. Considering
management's strong execution and alignment to continue executing, equity upside is
warranted.
Prior to the pandemic, Aramark was consistently among the top players in the food, facilities, and uniform management industry. While the pandemic was a tough time, Aramark was able to maintain most of its contracts, and coming out of the pandemic, a lot of the $900 billion industry that was locked up by either in-house operations or small players that were knocked out by the pandemic is open for Aramark to grab to gain market
share.
Aramark's management is closely aligned to focus on operating income, revenue growth, free cash flow, and ROIC, which should incentivize management.
Management confidence on the Q4 earnings call around ability to navigate a tough inflationary environment, specifically about their pricing and margins, highlights that the
company seems to be executing well.
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.
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