Aramark Enjoys Solid Organic Sales Growth and Margin Expansion in Fiscal Second Quarter

We reiterate our $26 per share fair value estimate and no moat rating following Aramark’s fiscal second-quarter results. Consolidated revenues reached $3.6 billion in the quarter, growing approximately 6% on an organic basis, or 4% when excluding an extra calendar week that affects comparability between fiscal years 2014 and 2015. Robust activity in the education and health-care sectors contributed to healthy underlying sales growth of 4% in North America, offsetting some weakness in the Canadian businesses exposed to the oil and gas sector. International sales increased organically by 6% year over year, bolstered by low-single-digit growth in the improving European region and double-digit growth in emerging markets. In the uniform segment, recent investments into capacity expansion boosted underlying sales growth to 4%.