Aramark (ARMK) versus Chuy’s (CHUY) Critical Survey

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

Dividends

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

Risk and Volatility

Aramark has a beta of 1.1, indicating that its stock price is 10% more volatile than the S&P 500. Comparatively, Chuy’s has a beta of 0.34, indicating that its stock price is 66% less volatile than the S&P 500.

Profitability

This table compares Aramark and Chuy’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%
Chuy’s 1.37% 7.89% 4.81%

Analyst Recommendations

This is a summary of recent recommendations and price targets for Aramark and Chuy’s, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Aramark 0 4 8 0 2.67
Chuy’s 0 6 1 0 2.14

Aramark presently has a consensus target price of $40.64, indicating a potential upside of 28.80%. Chuy’s has a consensus target price of $27.50, indicating a potential upside of 27.14%. Given Aramark’s stronger consensus rating and higher probable upside, analysts clearly believe Aramark is more favorable than Chuy’s.

Earnings & Valuation

This table compares Aramark and Chuy’s’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Aramark $15.79 billion 0.49 $567.88 million $1.99 15.85
Chuy’s $398.20 million 0.91 $5.54 million $0.88 24.58

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

Summary

Aramark beats Chuy’s on 11 of the 15 factors compared between the two stocks.

About Aramark

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.

About Chuy’s

Chuy's Holdings, Inc., through its subsidiaries, owns and operates restaurants under the Chuy's name in Texas and 19 states in the Southeastern and Midwestern United States. As of December 31, 2017, the company operated 91 Chuy's restaurants in 19 states. Chuy's Holdings, Inc. was founded in 1982 and is headquartered in Austin, Texas.

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