Aramark: Undervalued and Recession-resilient
- August 27, 2019
Coverage Initiated with Outperform Rating
As a leading global provider of food, facilities and services, as well as uniform services, Oppenheimer analysts believe Aramark represents an interesting investment opportunity. The company now has the necessary scale to optimize revenues and margins, and reduce debt the balance sheet (also known as 'delevering'). There is also an opportunity to streamline the portfolio—a sale of uniform and/or their international business—and to use the proceeds to delever, pursue larger mergers and acquisitions, and ultimately entertain the company’s third leveraged buyout in 35 years.
The company enjoys multi-year contracts and has many large strategic accounts across the education, sports and commercial segment fields. The renewal rates in the more recession-resilient end-markets—education and healthcare— are higher than 95%.
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