Investment Thesis
Aramark exhibits severe financial distress with deeply negative free cash flow (-904.4M, -18.7% FCF margin) despite modest revenue growth, indicating the business is consuming rather than generating cash. Critical leverage metrics including 1.94x debt-to-equity ratio and 0.8x interest coverage ratio, combined with negative operating cash flow, create an unsustainable capital structure that threatens financial viability.
ARMK Strengths
- Revenue growing 6.4% YoY shows market demand stability in food services sector
- Diluted EPS increased 23.2% YoY despite flat net income, indicating share buyback activity
- Modest liquidity position with 1.27x current ratio and $439.6M cash reserves provides near-term runway
ARMK Risks
- Severely negative free cash flow of -904.4M indicates business cannot fund operations and capital needs from internal sources
- Interest coverage ratio of 0.8x means operating income insufficient to cover interest expense, creating default risk
- High leverage at 1.94x debt-to-equity with $6.2B long-term debt on only 3.2B equity base creates financial instability
- Operating cash flow negative at -782.2M despite positive net income suggests earnings quality issues and working capital deterioration
- Minimal profitability with 2.0% net margin and 0.7% ROA limits financial flexibility
Key Metrics to Watch
- Operating cash flow trend - critical to return to positive to service debt obligations
- Free cash flow and FCF margin - must achieve positive conversion to ensure sustainability
- Interest coverage ratio - needs to exceed 2.0x minimum to reduce default risk
- Debt-to-equity ratio trajectory - should move below 1.5x to improve financial stability
- Working capital management - investigate causes of negative operating cash flow versus positive net income
ARMK Financial Metrics
ARMK Profitability Ratios
ARMK Balance Sheet & Liquidity
ARMK 5-Year Financial Trend
5-Year Trend Summary: Aramark's revenue has grown significantly by 14% over the 5-year period, indicating strong business expansion. The most recent EPS of $2.57 reflects profitable operations.
ARMK Growth Metrics (YoY)
ARMK Quarterly Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q1 2026 | $4.6B | $96.2M | $0.36 |
| Q3 2025 | $4.4B | $28.5M | $0.22 |
| Q2 2025 | $4.2B | $28.5M | $0.20 |
| Q1 2025 | $4.4B | $28.5M | $0.11 |
| Q3 2024 | $4.1B | $28.5M | $0.22 |
| Q2 2024 | $3.9B | $28.5M | $0.20 |
| Q1 2024 | $3.9B | $28.5M | $0.11 |
| Q3 2023 | $4.1B | $35.7M | $0.16 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
ARMK Capital Allocation
ARMK SEC Filings
Access official SEC EDGAR filings for Aramark (CIK: 0001584509)