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Aramark's Stock Takes a Hit After Missing Earnings Expectations

MarketDash Editorial Team
21 days ago
Aramark shares fell Monday after the company reported fourth-quarter fiscal 2025 results that missed Wall Street's expectations on both earnings and revenue, despite posting double-digit growth.

Aramark (ARMK) shares slipped Monday after the food service and facilities management giant delivered fourth-quarter fiscal 2025 results that left investors wanting more, despite some genuinely impressive underlying numbers.

The Numbers Tell a Mixed Story

Here's where things get interesting. Aramark posted revenue growth of 14% year-over-year on both GAAP and organic bases, reaching $5.05 billion. That sounds great until you realize analysts were expecting $5.16 billion. When you miss by $110 million, the market notices.

The revenue picture got a boost from strong new business wins, solid customer retention, and healthy base volume growth. An extra 53rd week in the fiscal calendar added an estimated 7% to the top line, which helps explain some of that growth.

Adjusted operating income climbed 6% year-over-year to $289 million, thanks to higher revenue, technology-driven efficiencies in the supply chain, and careful cost management. But here's where the disappointment really hit: adjusted EPS came in at 57 cents, missing the 65-cent consensus estimate. GAAP EPS actually fell 28% to 33 cents.

What dragged down earnings? Incentive-based compensation knocked 7 cents off both GAAP and adjusted EPS, representing impacts of 15% and 13%, respectively. The GAAP figure also took a hit from a non-cash asset impairment related to a prior-year minority investment.

On the balance sheet front, Aramark held $639.1 million in cash and equivalents as of October 3. Operating cash flow for the full year reached $921 million, with free cash flow coming in at $454 million.

How the Business Performed

The segment breakdown shows where Aramark's momentum is building. FSS United States sales jumped 14% year-over-year to $3.61 billion, led by Business & Industry with record net new business, Education benefiting from high retention and optimized meal plans alongside rising enrollment, and Healthcare posting its strongest results in over two years.

FSS International sales gained 16% year-over-year to $1.44 billion, powered by broad-based growth across the U.K., Canada, Ireland, Spain, and Latin America.

Good News on Dividends

Despite the earnings miss, Aramark's board approved a 14% increase in the quarterly dividend to 12 cents per share. The dividend will be paid on December 17 to stockholders of record at the close of business on December 5, 2025.

What Management Is Saying

CEO John Zillmer highlighted the company's wins: "In addition to being awarded one of the most prestigious medical systems in the world, we delivered almost $1 billion in Annualized Net New business, added more than $1 billion of new purchasing spend in our Global Supply Chain network for a second consecutive year, and achieved a leverage ratio of 3.25x, a number we haven't seen since prior to when Aramark went private in 2007."

Looking Ahead

Here's where things get more interesting. Aramark forecasts fiscal 2026 adjusted EPS of $2.18-$2.28, which blows past the $1.90 estimate. The company also expects sales of $19.55-$19.95 billion, compared to the $18.624 billion estimate. Adjusted operating income is projected at $1.100-$1.150 billion for the year.

So while the current quarter disappointed, management is clearly confident about what's coming next.

Price Action: ARMK shares were trading lower by 4.90% to $36.17 at last check Monday.

Back to News

Aramark's Stock Takes a Hit After Missing Earnings Expectations

MarketDash Editorial Team
21 days ago
Aramark shares fell Monday after the company reported fourth-quarter fiscal 2025 results that missed Wall Street's expectations on both earnings and revenue, despite posting double-digit growth.

Aramark (ARMK) shares slipped Monday after the food service and facilities management giant delivered fourth-quarter fiscal 2025 results that left investors wanting more, despite some genuinely impressive underlying numbers.

The Numbers Tell a Mixed Story

Here's where things get interesting. Aramark posted revenue growth of 14% year-over-year on both GAAP and organic bases, reaching $5.05 billion. That sounds great until you realize analysts were expecting $5.16 billion. When you miss by $110 million, the market notices.

The revenue picture got a boost from strong new business wins, solid customer retention, and healthy base volume growth. An extra 53rd week in the fiscal calendar added an estimated 7% to the top line, which helps explain some of that growth.

Adjusted operating income climbed 6% year-over-year to $289 million, thanks to higher revenue, technology-driven efficiencies in the supply chain, and careful cost management. But here's where the disappointment really hit: adjusted EPS came in at 57 cents, missing the 65-cent consensus estimate. GAAP EPS actually fell 28% to 33 cents.

What dragged down earnings? Incentive-based compensation knocked 7 cents off both GAAP and adjusted EPS, representing impacts of 15% and 13%, respectively. The GAAP figure also took a hit from a non-cash asset impairment related to a prior-year minority investment.

On the balance sheet front, Aramark held $639.1 million in cash and equivalents as of October 3. Operating cash flow for the full year reached $921 million, with free cash flow coming in at $454 million.

How the Business Performed

The segment breakdown shows where Aramark's momentum is building. FSS United States sales jumped 14% year-over-year to $3.61 billion, led by Business & Industry with record net new business, Education benefiting from high retention and optimized meal plans alongside rising enrollment, and Healthcare posting its strongest results in over two years.

FSS International sales gained 16% year-over-year to $1.44 billion, powered by broad-based growth across the U.K., Canada, Ireland, Spain, and Latin America.

Good News on Dividends

Despite the earnings miss, Aramark's board approved a 14% increase in the quarterly dividend to 12 cents per share. The dividend will be paid on December 17 to stockholders of record at the close of business on December 5, 2025.

What Management Is Saying

CEO John Zillmer highlighted the company's wins: "In addition to being awarded one of the most prestigious medical systems in the world, we delivered almost $1 billion in Annualized Net New business, added more than $1 billion of new purchasing spend in our Global Supply Chain network for a second consecutive year, and achieved a leverage ratio of 3.25x, a number we haven't seen since prior to when Aramark went private in 2007."

Looking Ahead

Here's where things get more interesting. Aramark forecasts fiscal 2026 adjusted EPS of $2.18-$2.28, which blows past the $1.90 estimate. The company also expects sales of $19.55-$19.95 billion, compared to the $18.624 billion estimate. Adjusted operating income is projected at $1.100-$1.150 billion for the year.

So while the current quarter disappointed, management is clearly confident about what's coming next.

Price Action: ARMK shares were trading lower by 4.90% to $36.17 at last check Monday.