Aramark 2025 Q4 Earnings Misses Estimates as Net Income Dips 28.6%

Aramark (ARMK) reported fiscal 2025 Q4 earnings on November 17, 2025, with results falling short of market expectations. Revenue grew 14.3% year-over-year to $5.05 billion, driven by robust new business wins, but missed the $5.16 billion forecast. Adjusted EPS of $0.57 lagged the $0.65 consensus, while net income declined 28.6% to $87.24 million. Guidance for FY2026 also underperformed, with management citing margin pressures from incentive costs and new client onboarding.

Revenue

Aramark’s total revenue surged to $5.05 billion in Q4 2025, reflecting a 14.3% year-over-year increase. The Food & Support Services (FSS) segment, the company’s core business, accounted for the entire revenue, with the U.S. division contributing $3.61 billion and international operations adding $1.44 billion. Notably, the corporate segment reported no revenue, underscoring the company’s focus on its core foodservice and facilities management operations.

Earnings/Net Income

The company’s net income declined sharply to $87.24 million in Q4 2025, a 28.6% drop from $122.25 million in the prior year. Earnings per share (EPS) fell 28.3% to $0.33, while adjusted EPS of $0.57 (excluding non-recurring items) also missed estimates. The decline was attributed to $25 million in incentive-based compensation tied to record new business wins, which pressured margins. The significant decline in EPS and net income highlights the challenges faced by Aramark in maintaining profitability despite revenue growth.

Post-Earnings Price Action Review

The strategy of buying Aramak shares on the date of its revenue raise announcement and holding for 30 days showed favorable performance over the past three years, with a compound annual growth rate (CAGR) of 14.68%, outperforming the NASDAQ Composite Index’s 9.17% CAGR. The approach demonstrated robust risk-adjusted returns, with a Sharpe Ratio of 1.53, and a maximum drawdown of -15.46% during market corrections, which was milder than the broader market.

CEO Commentary

CEO John Zillmer highlighted Aramark’s fiscal 2025 achievements, including $1.6 billion in annualized gross new wins (12% growth YoY) and a 96.3% client retention rate. He acknowledged Q4 challenges due to delayed new account openings but expressed optimism about upcoming momentum. Strategic priorities include AI-driven healthcare menus and $1 billion in new supply chain spend. Zillmer reiterated confidence in sustaining 4–5% net new growth with retention above 95%.

Guidance

Aramark guided to FY2026 organic revenue of $19.45–19.85 billion (7–9% growth), adjusted operating income of $1.1–1.15 billion (12–17% growth), and adjusted EPS of $2.18–2.28 (20–25% growth). The company aims to maintain leverage below 3x, driven by disciplined cost management and $1.6 billion in gross new wins.

Additional News

Aramark announced a 14% increase in its quarterly dividend to $0.12 per share, payable on December 17, 2025, reflecting confidence in its cash flow. The company repurchased 4 million shares during FY2025 and continued buybacks post-fiscal year under a 10b5-1 plan. Additionally, Aramark reduced its leverage ratio to 3.25x, the lowest in nearly 20 years, signaling improved financial flexibility.