Aramark Reports Improving International Sales, Increasing Productivity in 3Q

We reiterate our $26 fair value estimate and no-moat rating for Aramark following fiscal third-quarter results. Consolidated revenue remained flat year over year at $3.5 billion when excluding the effects of currency translation; however, underlying sales actually grew 2% when adjusting for an extra calendar week that affects the comparability between fiscal 2014 and 2015. Nonrenewal of a major sports and entertainment contract held organic revenue flat in the North American segment, despite brisk new account sales in the education and health-care markets. Strength in Germany and China boosted organic revenue growth in the international segment by 6% year over year, while capacity expansion in the uniform segment supported a 4% increase in sales on an organic basis.