Investment Thesis
Aramark exhibits deteriorating operational health masked by modest revenue growth. Most critically, the company generates negative operating cash flow (-$381.9M) and negative free cash flow (-$605.4M) despite positive net income, signaling acute working capital stress and unsustainable cash burn. Combined with elevated leverage (1.85x D/E) and dangerously weak interest coverage (1.5x), the company faces meaningful refinancing risk.
Strengths
- Revenue growth of 6.4% YoY indicates market demand in food service sector
- Positive operating income of $437.3M demonstrates core business generates profits
- Cash position of $475.7M provides near-term operational buffer
Risks
- Operating cash flow of -$381.9M and free cash flow of -$605.4M indicate company is burning cash and not converting sales to actual cash despite profitability
- Debt-to-equity ratio of 1.85x combined with interest coverage of only 1.5x creates significant refinancing and solvency risk
- Flat net income growth (-0.1% YoY) despite 6.4% revenue growth indicates deteriorating operational efficiency and margin compression
- Razor-thin operating margin (4.5%) and net margin (2.0%) leave minimal buffer for adverse business conditions
- Negative FCF margin of -6.2% demonstrates structural cash consumption at scale
Key Metrics to Watch
- Operating cash flow trend and drivers of working capital deterioration
- Interest coverage ratio sustainability given debt obligations
- Operating margin trend and ability to achieve pricing power
- Free cash flow path to positive territory
Financial Metrics
Revenue
9.7B
Net Income
198.1M
EPS (Diluted)
$0.74
Free Cash Flow
-605.4M
Total Assets
13.8B
Cash
475.7M
Profitability Ratios
Gross Margin
N/A
Operating Margin
4.5%
Net Margin
2.0%
ROE
6.0%
ROA
1.4%
FCF Margin
-6.2%
Balance Sheet & Liquidity
Current Ratio
1.21x
Quick Ratio
1.07x
Debt/Equity
1.85x
Debt/Assets
0.0%
Interest Coverage
1.55x
Long-term Debt
6.1B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-14T07:53:43.756977 |
Data as of: 2026-04-03 |
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