Aramark (ARMK) and Brinker International (EAT) Critical Review
Aramark (NYSE: ARMK) and Brinker International (NYSE:EAT) are both consumer staples companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, analyst recommendations, valuation, institutional ownership, dividends, risk and profitabiliy.
Aramark pays an annual dividend of $0.41 per share and has a dividend yield of 1.0%. Brinker International pays an annual dividend of $1.36 per share and has a dividend yield of 3.8%. Aramark pays out 31.8% of its earnings in the form of a dividend. Brinker International pays out 44.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Aramark has raised its dividend for 2 consecutive years and Brinker International has raised its dividend for 6 consecutive years. Brinker International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation & Earnings
This table compares Aramark and Brinker International’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Aramark||$14.49 billion||0.68||$1.30 billion||$1.29||31.34|
|Brinker International||$3.22 billion||0.55||$457.47 million||$3.08||11.74|
Aramark has higher revenue and earnings than Brinker International. Brinker International is trading at a lower price-to-earnings ratio than Aramark, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
Aramark has a beta of 0.5, meaning that its share price is 50% less volatile than the S&P 500. Comparatively, Brinker International has a beta of 0.27, meaning that its share price is 73% less volatile than the S&P 500.
This is a breakdown of current ratings and recommmendations for Aramark and Brinker International, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Aramark presently has a consensus price target of $43.00, suggesting a potential upside of 6.36%. Brinker International has a consensus price target of $47.50, suggesting a potential upside of 31.32%. Given Brinker International’s higher probable upside, analysts plainly believe Brinker International is more favorable than Aramark.
This table compares Aramark and Brinker International’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Institutional and Insider Ownership
95.3% of Aramark shares are held by institutional investors. 2.9% of Aramark shares are held by company insiders. Comparatively, 1.8% of Brinker International shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Aramark beats Brinker International on 12 of the 18 factors compared between the two stocks.
Aramark Company Profile
Aramark is a global provider of food, facilities and uniform services to education, healthcare, business and industry, and sports, leisure and corrections clients. The Company operates through three segments: Food and Support Services North America (FSS North America), Food and Support Services International (FSS International), and Uniform and Career Apparel (Uniform). FSS North America and FSS International segments include food, refreshment, specialized dietary and support services, including facility maintenance and housekeeping, provided to business, educational and healthcare institutions and in sports, leisure and other facilities. The Uniform segment includes rental, sale, cleaning, maintenance and delivery of personalized uniforms and other textile items to clients in a range of industries in the United States, Puerto Rico, Japan and Canada, including manufacturing, transportation, construction, restaurants and hotels, healthcare and pharmaceutical industries.
Brinker International Company Profile
Brinker International, Inc. is engaged in the ownership, operation, development, and franchising of the Chili’s Grill & Bar (Chili’s) and Maggiano’s Little Italy (Maggiano’s) restaurant brands. The Company’s Chili’s operates Bar & Grill category of casual dining. Chili’s menu features authentic Fresh Mex and Fresh Tex cuisine, including signature items, such as Baby Back Ribs smoked in-house, Hand-Crafted Burgers served with house-made garlic dill pickles, Mix and Match Fajitas, Tableside Guacamole and house-made Chips and Salsa. Maggiano’s is a full-service, casual dining Italian restaurant brand. Its Maggiano’s restaurants feature individual and family-style menus, and its restaurants also has banquet facilities designed to host party business or social events. The Company owns, operates or franchises restaurants, which include approximately 1,650 restaurants in the United States, over 30 countries and approximately two territories outside of the United States.
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