Aramark's Stable Contract Business Makes It a Reliable Holding

Aramark is a stable company with a contract-based business model, providing services such as food and facility management for schools, hospitals, stadiums, and office campuses. The company has high customer retention rates, making it a reliable long-term hold.

Aramark (NYSE: ARMK), a global leader in food and facilities management, has demonstrated resilience and reliability through its contract-based business model. With high customer retention rates and steady revenue growth, the company offers a compelling investment opportunity for long-term investors.

Aramark's core business involves providing food service and facility management solutions to a diverse range of clients, including schools, hospitals, stadiums, and office campuses. The company's long-term contracts, which account for a significant portion of its revenue, ensure a stable and predictable income stream. In Q2 2025, Aramark reported a 98% client retention rate, highlighting the company's ability to maintain strong relationships with its clients [1].

The company's financial performance has been robust. In FY 2024, Aramark generated $17.4 billion in revenue, an 8% increase from the prior year. Adjusted earnings per share grew by 35% to $1.55. The company's management has guided for FY 2025 revenue growth of around 7.5% to 9.5%, with even stronger growth in earnings and operating income [1].

Aramark's international segment has been growing, with the international segment adding to the total revenue and growing faster than the US segment in the first half of the year. The company's focus on reducing costs and increasing efficiency has helped expand margins, contributing to its overall financial stability [1].

Despite a debt-to-equity ratio of more than 2:1, Aramark has been returning cash to shareholders. In November 2024, the company authorized a $500 million share repurchase plan, demonstrating management's confidence in the business [1].

The company's levered free cash flow has been upward trending over the last three financial years, although the trailing twelve-month (TTM) is lower than FY 2024 at $401.7 million. Aramark has also grown its dividend program over the last two years, with a healthy amount of cash on hand at $963.76 million [1].

Aramark's stable business model, high customer retention rates, and robust financial performance make it an attractive investment for long-term investors seeking a steady and reliable stock. The company's focus on international growth and cost efficiency positions it well for future success.

References:
[1] https://aramarkcareers.com/UnitedStates/job/University-Center-Food-Service-Director-MI-48710/1306850000/
[2] https://seekingalpha.com/article/4802594-aramark-stock-long-term-contracts-make-it-reliable-hold