Financial Review: Aramark (ARMK) vs. Denny’s (DENN)

Aramark (NYSE:ARMK) and Denny’s (NASDAQ:DENN) are both consumer staples companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, risk, analyst recommendations, earnings, institutional ownership, valuation and dividends.

Analyst Recommendations

This is a summary of current ratings and price targets for Aramark and Denny’s, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Aramark 0 4 8 0 2.67
Denny’s 0 0 2 0 3.00

Aramark currently has a consensus price target of $40.64, suggesting a potential upside of 27.51%. Denny’s has a consensus price target of $19.33, suggesting a potential downside of 0.50%. Given Aramark’s higher probable upside, equities analysts clearly believe Aramark is more favorable than Denny’s.

Profitability

This table compares Aramark and Denny’s’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Aramark 3.27% 17.31% 3.89%
Denny’s 7.89% -34.51% 12.18%

Valuation & Earnings

This table compares Aramark and Denny’s’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Aramark $15.79 billion 0.50 $567.88 million $1.99 16.02
Denny’s $630.18 million 1.86 $43.69 million $0.68 28.57

Aramark has higher revenue and earnings than Denny’s. Aramark is trading at a lower price-to-earnings ratio than Denny’s, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Aramark has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500. Comparatively, Denny’s has a beta of 0.17, meaning that its share price is 83% less volatile than the S&P 500.

Dividends

Aramark pays an annual dividend of $0.44 per share and has a dividend yield of 1.4%. Denny’s does not pay a dividend. Aramark pays out 22.1% of its earnings in the form of a dividend. Aramark has increased its dividend for 4 consecutive years.

Institutional and Insider Ownership

93.2% of Denny’s shares are owned by institutional investors. 3.5% of Aramark shares are owned by company insiders. Comparatively, 6.1% of Denny’s shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

Aramark beats Denny’s on 9 of the 17 factors compared between the two stocks.

Aramark Company Profile

Aramark provides food, facilities management, and uniform services to education, healthcare, business and industry, sports, leisure, and corrections clients in North America and internationally. It operates in three segments: Food and Support Services United States, Food and Support Services International, and Uniform and Career Apparel. The company offers managed services, including dining, catering, food service management, and convenience-oriented retail operations; non-clinical support services, such as patient food and nutrition, retail food, and procurement services; and plant operations and maintenance, custodial/housekeeping, energy management, clinical equipment maintenance, grounds keeping, and capital project management services. It also provides on-site restaurants, convenience stores, and executive dining services; beverage and vending services; and facility management services comprising landscaping, transportation, payment, and other facility consulting services relating to building operations. In addition, the company offers concessions, banquet, and catering services; retail services and merchandise sale, recreational, and lodging services; and facility management services at sports, entertainment, and recreational facilities. Additionally, the company offers correctional food, and food and facilities management services for parks; and operates commissaries, laundry facilities, and property rooms. It also provides design, sourcing and manufacturing, delivery, cleaning, maintenance, and marketing services for uniforms and accessories; provides managed restroom services; and rents uniforms, work clothing, outerwear, particulate-free garments, and non-garment items and related services that include mats, shop towels, and first aid supplies. The company was formerly known as ARAMARK Holdings Corporation and changed its name to Aramark in May 2014. Aramark was founded in 1959 and is based in Philadelphia, Pennsylvania.

Denny’s Company Profile

Denny's Corporation, through its subsidiary, Denny's, Inc., owns and operates full-service restaurant chains under the Denny's brand. As of December 26, 2018, it operated 1,709 franchised, licensed, and company restaurants, including 1,578 restaurants in the United States; and 131 in Canada, Puerto Rico, Mexico, New Zealand, the Philippines, Honduras, Costa Rica, the United Arab Emirates, Guam, the United Kingdom, El Salvador, and Guatemala. The company was formerly known as Advantica Restaurant Group, Inc. and changed its name to Denny's Corporation in 2002. The company was founded in 1953 and is headquartered in Spartanburg, South Carolina.

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