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Looking at Aramark's (NYSE:ARMK) earnings update in December 2018, analyst forecasts seem fairly subdued, with earnings expected to grow by 12% in the upcoming year against the higher past 5-year average growth rate of 30%. By 2020, we can expect Aramark’s bottom line to reach US$634m, a jump from the current trailing-twelve-month of US$568m. Below is a brief commentary on the longer term outlook the market has for Aramark. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
Exciting times ahead?
The view from 12 analysts over the next three years is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To get an idea of the overall earnings growth trend for ARMK, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
From the current net income level of US$568m and the final forecast of US$701m by 2022, the annual rate of growth for ARMK’s earnings is 6.7%. This leads to an EPS of $2.34 in the final year of projections relative to the current EPS of $2.31. Margins are currently sitting at 3.6%, which is expected to expand to 4.1% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Aramark, I've put together three important factors you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Aramark worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Aramark is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Aramark? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.