Aramark (ARMK:NYS) Fundamental Valuation Report

Fundamental Valuation Report

Aramark(ARMK:NYS)

Consumer Cyclical:Restaurants

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$36.92 (USD) 21/11/2018

Weighted Valuation
$50.08 (USD)

Overall Rating
Undervalued by 35.7%

Valuation Models Analyst Consensus: $52.50 (USD)
(in order of importance) Comparables: $46.45 (USD)
Adjusted Book Value: $50.10 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Undervalued on an Asset Valuation

Company Overview (ARMK:NYS USD)

Price 36.92
Range 36.01 – 37.16
52 week 34.55 – 45.99
Open 36.09
Vol / Avg. 2.48M/3.59M
Mkt cap 9.1B
P/E 18.37
Div/yield 0.42/0.01
EPS 2.24
Shares 246.73M
Beta 0.00

Company Description

Aramark provides food, facilities, and uniform services to a variety of clients and institutions. The majority of company revenue comes from its North American food and support services segment. Smaller but substantial segments include food and support services international and uniform and career apparel. The food and support services segments provide food for school districts; colleges; healthcare facilities; correctional institutions; and business, sports, and entertainment venues. The uniform segment rents, delivers, cleans, and maintains work clothes and ancillary items like towels and mats to customers in North America and Japan. The company has hundreds of service locations and distribution centers across the United States and Canada.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for ARMK:NYS

Using a discounted cash flow model we generated an intrinsic value of $113.72 (USD) for ARMK:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

ARMK:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $113.72 1% 5% 1% 5%
WACC (or Ke) 6.97 $147.72 $91.07
Terminal Growth Rate 2.00 $92.61 $145.46
Tax Rate -0.21 $120.61 $106.83
Cash Flow 2,097,872,754 $104.09 $123.35
Capital Expenditures -531,920,000 $111.68 $115.76
Long Term Debt 5,433,184,000 $114.82 $112.62

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $46.45 (USD) for ARMK:NYS. We also generated a valuation of $52.27 (USD) using other metrics and comparables.
The comparable companies were Dunkin Brands Group (DNKN:NAS), Dave & Buster’s Enter (PLAY:NAS), Texas Roadhouse (TXRH:NAS), Wendy’s (WEN:NAS) and Yum China Holdings (YUMC:NYS).

Company ARMK:NYS End Date Value
Earnings/Share $2.24 (USD)
Book Value/Share $11.53 (USD)
Sales/Share $61.61 (USD)
Cash Flow/Share $2.96 (USD)
EBITDA/Share $5.61 (USD)
Price Based on Comps Adjustment Factor (%)
$50.63 (USD) 29.4
$69.31 (USD) -36.1
$135.76 (USD) -78.3
$14.45 (USD) -1.4
$76.88 (USD) 4.6
ARMK:NYS Ratios Used Average Values DNKN:NAS PLAY:NAS TXRH:NAS WEN:NAS YUMC:NYS
17.87 PE Ratio 22.60 17.87 19.65 27.48 19.37 28.63
3.11 PB Ratio 6.01 0.00 5.24 4.76 9.48 4.55
0.58 PS Ratio 3.24 7.39 2.03 1.85 3.05 1.88
12.14 PCF Ratio 14.55 23.21 8.42 13.42 14.59 13.12
12.42 EV to EBITDA 13.71 17.47 9.58 13.86 17.74 9.88

Multiples

Using a multiples approach we generated a valuation of  $51.35 (USD) for ARMK:NYS

Company ARMK:NYS End Date Value
Earnings/Share $2.24 (USD)
Book Value/Share $11.53 (USD)
Sales/Share $61.61 (USD)
Cash Flow/Share $2.96 (USD)
EBITDA/Share $5.61 (USD)
Price Based on Comps Adjustment Factor
$72.39 (USD) 0
$47.09 (USD) 0
$36.99 (USD) 0
$35.03 (USD) 0
$65.25 (USD) 0
Ratios Ratio Average
PE Ratio 32.32
PB Ratio 4.08
PS Ratio 0.60
PCF Ratio 11.84
EV to EBITDA 11.63

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  ARMK:NYS for the last 5 years was  4.08

We ran the Adjusted Book Value for  ARMK:NYS and generated a book value of  $12.28 (USD)
By multiplying these we get an adjusted valuation of  $50.10 (USD)

Analyst Data

In the Stockcalc database there are 2 analysts that provide a valuation for ARMK:NYS. The 2 analysts have a concensus valuation for ARMK:NYS for 2019 of $52.50 (USD).

ARMK:NYS Aramark

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
2 0 0 5.0000 Buy 2018-11-21

Current Price: 36.92 USD

Analyst Consensus
USD Millions 2019 2020
Mean EPS 2.54 2.81
# EPS Analysts 2 2
Mean Revenue 16,235.00 16,735.00
# Revenue Analysts 1 1
Mean Target Price 52.50
Mean Cash Flow 4.75 4.79
Mean EBITDA 1,765.00 1,864.70
Mean Net Income 637.60 703.70
Mean Debt Outstanding 6,215.60 5,681.60
Mean Tax Rate
Mean Growth Rate
Mean Capital Expenditure 590.00 585.70

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

Notice to User


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