ARMK

Looking back on business process outsourcing & consulting stocks’ Q2 earnings, we examine this quarter’s best and worst performers, including Aramark (NYSE:ARMK) and its peers. The sector stands to benefit from ongoing digital transformation, increasing corporate demand for cost efficiencies, and the growing complexity of regulatory and cybersecurity landscapes. For those that invest wisely, AI and automation capabilities could emerge as competitive advantages, enhancing process efficiencies for the companies themselves as well as their clients. On the flip side, AI could be a headwind as well as the technology could lower the barrier to entry in the space and give rise to more self-service solutions. Additional challenges in the years ahead could include wage inflation for highly skilled consultants and potential regulatory scrutiny on outsourcing practices—especially in industries like finance and healthcare where who has access to certain data matters greatly. The 8 business process outsourcing & consulting stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 1.6% while next quarter’s revenue guidance was 1.5% below. Thankfully, share prices of the companies have been resilient as they are up 9.2% on average since the latest earnings results. From serving hot dogs at major league stadiums to managing college dining halls that feed thousands daily, Aramark (NYSE:ARMK) provides food services and facilities management to schools, healthcare facilities, businesses, sports venues, and correctional institutions across 16 countries. Aramark reported revenues of $5.06 billion, up 9.3% year on year. This print exceeded analysts’ expectations by 2.4%. Overall, it was a very strong quarter for the company with a beat of analysts’ EPS estimates. Interestingly, the stock is up 7.2% since reporting and currently trades at $59.75. We think Aramark is a good business, but is it a buy today? Read our full report here, it’s free. Founded in 2002 during a time of significant regulatory change in corporate America, Huron Consulting Group (NASDAQ:HURN) is a professional services company that helps organizations develop growth strategies, optimize operations, and implement digital transformation solutions. Huron reported revenues of $475 million, up 15.4% year on year, outperforming analysts’ expectations by 3.2%. The business had an exceptional quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ full-year EPS guidance estimates. Huron scored the fastest revenue growth and highest full-year guidance raise of the whole group. The market seems happy with the results as the stock is up 28.9% since reporting. It currently trades at $156.44. Is now the time to buy Huron? Access our full analysis of the earnings results here, it’s free. With a team of approximately 450,000 employees across 75 countries, Concentrix (NASDAQ:CNXC) designs and delivers customer experience solutions that help global brands manage their customer interactions across digital channels and contact centers. Concentrix reported revenues of $2.46 billion, up 1.9% year on year, in line with analysts’ expectations. It was a softer quarter as it posted a significant miss of analysts’ EPS guidance for next quarter estimates and full-year revenue guidance slightly missing analysts’ expectations. Concentrix delivered the weakest guidance update and weakest full-year guidance update in the group. Interestingly, the stock is up 9.7% since the results and currently trades at $27.68. Read our full analysis of Concentrix’s results here. Originally spun off from General Electric in 2005 to provide business process services, Genpact (NYSE:G) is a global professional services firm that helps businesses transform their operations through digital technology, AI, and data analytics solutions. Genpact reported revenues of $1.34 billion, up 7.1% year on year. This print topped analysts’ expectations by 0.8%. Zooming out, it was a mixed quarter as it also logged a beat of analysts’ EPS estimates but revenue guidance for next quarter meeting analysts’ expectations. Genpact scored the highest guidance raise among its peers. The stock is up 2.2% since reporting and currently trades at $36.96. Read our full, actionable report on Genpact here, it’s free. Starting as a virtual assistant service in 2008 before evolving into a global digital services provider, TaskUs (NASDAQ:TASK) provides outsourced digital services including customer experience management, content moderation, and AI data services to innovative technology companies. TaskUs reported revenues of $308.9 million, up 5% year on year. This result surpassed analysts’ expectations by 3.9%. More broadly, it was a satisfactory quarter as it also produced a beat of analysts’ EPS estimates but full-year revenue guidance meeting analysts’ expectations. The stock is up 22.9% since reporting and currently trades at $7.77. Read our full, actionable report on TaskUs here, it’s free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

On August 11, Aramark (NYSE:ARMK) reported fiscal third-quarter results that beat expectations on nearly every line, with organic revenue climbing 9% to $5 billion and adjusted earnings per share jumping almost 30% from a year earlier. The company also raised its full-year revenue growth outlook and pointed to a growing footprint inside AI data centers as its next act. A closer look at the numbers shows some of that strength leaning on adjustments and calendar quirks that are worth understanding before getting too excited. Aramark's growth is broad and not dependent on one segment. Organic revenue in the Food and Support Services/FSS US segment rose 8% to $3.5 billion, and would have topped 10% if not for a calendar shift in the education business that pushed some revenue into the fourth quarter. FSS International organic revenue rose 11% to $1.5 billion, led by strong performance in Spain, Canada, the UK, and Germany, contributing to nearly 200 new client locations added globally during the quarter. Client retention sits near 98%, and the company has landed more than $1.6 billion in new client wins so far this fiscal year, 51% ahead of the same stretch a year ago. The more interesting story sits inside Aramark Nexus, the unit built to serve hospitality needs at data centers and industrial sites. Aramark began operating its first site for a major hyperscaler in Texas just weeks before the earnings call, and management said the scope of work across that client's two locations has already grown roughly 40% beyond original estimates. A second site is being mobilized, and Aramark separately signed a multiyear deal with an AI data center colocation provider to run hospitality services for workforce communities in Wyoming and Texas, with the first site set to open early in the next fiscal year. If AI infrastructure spending keeps expanding the way it has, Aramark has positioned itself as a landlord of sorts for the workers building it. Not every number tells as clean a story. Aramark's GAAP earnings per share came in at $0.36 for the quarter, well below the $0.52 adjusted figure the company highlighted, a reminder that a meaningful chunk of the improvement comes from items management chooses to exclude. The calendar shift created an estimated $18 million to $19 million drag on adjusted operating income this quarter, temporarily weighing down reported growth rates across the international and domestic food segments. That means the reported 13% AOI growth and 9% revenue growth both come with an asterisk, making quarter-over-quarter comparisons harder to trust at face value. Cash generation, meanwhile, grew far more modestly than the income statement: net cash from operations rose just $41 million and free cash flow only $42 million, a small gain against a $5 billion quarterly revenue base. Aramark used some of that cash to repay $100 million in term loans after the quarter closed, but the company still describes its leverage ratio target of below 3 times as something to achieve by fiscal year-end rather than something already reached, meaning the balance sheet still has work to do even as growth investments like Nexus ramp up. Hedge fund ownership of Aramark rose to 42 funds in the most recent quarter from 36 in the prior period, which points to institutions adding rather than trimming their positions. Short interest sits at 5.95% of float, high enough to reflect a real pocket of skepticism but not a crowded short. Shares trade at a forward P/E of just 9.70 as of August 19, a multiple that assumes little of the growth management is projecting. Aramark's third quarter shows a company growing across every segment while building a genuinely new business line inside AI infrastructure, and the raised full-year revenue guidance reflects that confidence. But the gap between GAAP and adjusted earnings, the calendar-related noise in this quarter's growth rates, and a leverage ratio still working toward target all complicate a clean read on the underlying trend. For the growth story to hold, the Nexus expansion and international momentum need to keep compounding without more one-time boosts propping up the totals. While we acknowledge the potential of ARMK as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 10 Best Future Stocks to Buy Under $10 and 12 Best Performing Semiconductor Stocks to Invest In. Disclosure: None. Follow Insider Monkey on Google News.

Image source: The Motley Fool. Tuesday, Aug. 11, 2026 at 8:30 a.m. ET Senior Vice President, Investor Relations and Corporate Development - Felise Kissell Chief Executive Officer - John Zillmer Chief Financial Officer - Jim Tarangelo Operator: Good morning, and welcome to Aramark's Third Quarter and Fiscal 2026 Earnings Results Conference Call. My name is Kevin, and I'll be your operator for today's call. At this time, I'd like to inform you this conference is being recorded for rebroadcast. [Operator Instructions] I will now turn the call over to Felise Kissell, Senior Vice President, Investor Relations and Corporate Development. Ms. Kissell, please proceed. Felise Kissell: Thank you, and welcome to Aramark's earnings conference call and webcast. This morning, we will be hearing from our CEO, John Zillmer; as well as our CFO, Jim Tarangelo. As always, there are accompanying slides for this call that can be viewed through the webcast and are also available on the IR website for easy access. Our notice regarding forward-looking statements is in our press release. During this call, we will be making comments that are forward-looking. Actual results may differ materially from those expressed or implied as a result of various risks, uncertainties and important factors, including those discussed in the risk factors, MD&A and other sections of our annual report on Form 10-K and SEC filings. We will be discussing certain non-GAAP financial measures. A reconciliation of these items to U.S. GAAP can be found in our press release and IR website. I will now turn the call over to John. John Zillmer: Good morning, everyone, and welcome to our fiscal third quarter earnings call. Thank you for joining us. Jim and I are pleased to be here with you to review our financial results, provide an update on the business and discuss our strategic growth agenda, which continues to drive strong, sustained performance. We're heading into the fourth quarter with significant momentum across the portfolio, including industry-leading client retention at record levels of approximately 98%, underscoring the strength of our client relationships and the excellence of our service and execution. Accelerating organic revenue growth in every U.S. sector, absent the calendar shift in education, and across all regions within international. New client wins totaling more than $1.6 billion fiscal year-to-date, 51% higher than the comparable prior year period, reflecting strong demand for our hospitality capabilities and the depth of our sales pipeline, and the launch of operations just weeks ago under our recently awarded multiyear engagement with a top global hyperscaler, alongside the continued expansion of Aramark Nexus, which now includes providing premium hospitality services to workforce communities for an AI data center colocation leader. In the third quarter, organic revenue for the company grew 9% to $5 billion and would have increased another approximately 2% if not for the calendar shift. Once again, our strong revenue performance was driven by broad-based net new business and base business growth across sectors and geographies. These results are a testament to the dedication of our teams whose commitment to serving our clients, delivering exceptional hospitality experiences and performing at a high level every day has been instrumental in our success. Moving to the business segments. FSS U.S. organic revenue grew 8% to $3.5 billion and would have increased more than 10% excluding the calendar shift. Education would have achieved more than 7% growth absent the shift, which is expected to be fully recaptured in the fourth quarter. Collegiate Hospitality is benefiting from increased residential meal plan enrollment, record retention and the strongest selling season in recent history. U.S. revenue growth in the quarter was further driven by Sports & Entertainment's strong year-over-year performance, which reflected higher revenue from the ongoing Major League Baseball season along with an expanded client portfolio, including a Major League Soccer and Collegiate Athletics. We demonstrated the strength of our capabilities during the 15 FIFA World Cup matches hosted at the stadiums we serve, delivering premium fan experiences amid unprecedented attendance and record per capita spending, with an additional 4 matches held after quarter end. We also proudly supported our NHL and NBA clients throughout the playoffs, and extend our congratulations to the San Antonio Spurs on reaching the NBA finals. Our S&E team was hard at work last month during the MLB All-Star game here in Philadelphia, providing hospitality services throughout the 3-day series of events with merchandise revenue a particular highlight. Healthcare Plus built upon the successful launch of Penn Medicine with our team actively mobilizing multiple lines of service across RWJBarnabas Health's 18 locations, while continuing to deliver strong base business performance. And Workplace Experience and Refreshments achieved double-digit compounded growth for the 19th consecutive quarter, reflecting the contribution from new business, exceptional client retention and continued base business performance across the portfolio. Now turning to Aramark Nexus. We began operations at our first Texas-based site supporting a top global hyperscaler, which contributed to revenue and profitability late in the third quarter as we started scaling our service offerings. We're currently mobilizing a second site for this client and the scope of work across both locations is now expected to increase by approximately 40% from original estimates. In addition, the client has indicated we should anticipate supporting additional sites as new locations come online. We remain in active dialogue with other leading hyperscalers as well, reflecting the strong demand for our integrated suite of capabilities. We continue to expand the reach of Aramark Nexus recently announcing a significant multiyear engagement with a leading AI data center colocation provider to deliver premium hospitality services to workforce communities across multiple locations, including in Wyoming and Texas. The initial site is scheduled to mobilize in the first half of our new fiscal year. Data center colocators develop, own and operate facilities that supply the power, cooling and infrastructure relied upon by technology companies. As these projects increase in scale and geographic reach, we believe that Nexus is uniquely positioned to help clients attract and retain skilled labor through differentiated hospitality solutions and premium amenities that enhance the employee experience and support project success. During the quarter, FSS U.S. continued to build on its strong momentum as we were awarded several additional client wins, including our first collaboration within the University of Colorado system at Colorado Springs, Grand Canyon University, Ohio Wesleyan University and Texas State University in Collegiate Hospitality. Texas State and Florida State University Athletics and Sports, the Camden City School District in Student Nutrition and Paul, Weiss in Workplace Experience as we expand our hospitality services into top-tier law firms. The International segment continued its strong growth trajectory, delivering another quarter of impressive results with organic revenue increasing 11% to $1.5 billion. Performance was broad-based across geographies and sectors, led by Spain, Canada, the U.K. and Germany. Concert and festival activity was especially strong with many of our venues further benefiting from major touring artists adding performances across Europe. We are also -- we also successfully served more than 300,000 fans during the multi-day Formula One Grand Prix in Barcelona, leveraging nearly 100 food and beverage locations across several event areas. Every country within the international portfolio delivered strong new business performance, underscoring the breadth of our service offerings and focus on excellence. International was awarded nearly 200 client location accounts during the quarter, including continued expansion in the mining industry, providing remote hospitality services for Discovery Silver mine in Canada as well as Codelco's Chuquicamata and AMSA's Los Pelambres copper mines in Chile. We also concluded our international Guest Chefs' Cup in Dublin, celebrating the very best of Aramark's culinary talent from around the world, following a year of in-country competitions. It was especially meaningful to see our host chefs from Ireland take top honors this year. On to global supply chain. Our global supply chain and GPO business maintained strong momentum, delivering more than $1.1 billion of annualized new spend globally fiscal year-to-date. This performance reflects the differentiation of our value proposition, market-leading procurement capabilities and disciplined execution. We believe Avendra International is well positioned as a premier global hospitality procurement solution with multinational clients increasingly consolidating spend with us across regions and continents, leveraging our scale, local expertise and extensive global supply network. We're also seeing inflation trends remain slightly more favorable than our original expectations across regions. Lastly, I would like to welcome Tony Spring as the newest member of Aramark's Board of Directors. As Chairman and CEO of Macy's, Tony brings deep executive leadership expertise and valuable strategic insights, particularly in integrating AI to enhance consumer experiences and leading a large diverse workforce. Before handing the call over to Jim, I want to reiterate that we are extremely confident in our ability to continue building on our strong results. We believe that the opportunities before us from the outperformance of our core business to the expansion of Aramark Nexus and our global supply chain platform position us well to capitalize on the substantial value-creating actions underway at the company. Once again, I would like to thank our teams around the globe for embodying our culture and values, which remain the foundation of who we are as a company. With that, Jim, I'll turn the call over to you. James Tarangelo: Thanks, John, and good morning, everyone. We had another record-breaking quarter, delivering impressive top and bottom line results, driven by broad-based performance across sectors and geographies. As John mentioned, we continue to experience strong momentum with the execution of our growth strategies creating significant opportunities throughout the company that position us well for the remainder of the year and beyond. Regarding profit growth in the third quarter, operating income grew 18% to $216 million versus the prior year period. Adjusted operating income increased 13% to $261 million, with AOI margins expanding nearly 20 basis points. The calendar shift reduced AOI by an estimated $20 million. AOI growth would have increased approximately 21% without the calendar shift with margin expansion of nearly 50 basis points on a constant currency basis. This double-digit profit growth and margin expansion were driven by higher revenue levels, expanded supply chain capabilities and effective cost management. Turning to the business segments. FSS U.S. reported AOI growth of 11% with AOI margins expanding more than 20 basis points. Excluding the calendar shift, AOI growth would have increased approximately 22% and with margins gaining almost 65 basis points. Profitability and margin expansion in the quarter was a result of greater revenue from base and new business, particularly in Sports & Entertainment, the Workplace Experience Group, Refreshments, and Healthcare. FSS U.S. also benefited from supply chain efficiencies and productivity gains from effective cost management. The International segment delivered AOI growth of 24%, with margins expanding nearly 60 basis points on a constant currency basis. AOI growth was driven by higher base business volume and net new business, along with strengthened supply chain economics. Our strong quarterly performance resulted in GAAP EPS of $0.36 and adjusted EPS of $0.52, an increase of nearly 30% versus the prior year and almost 45%, excluding the calendar shift, reflecting the successful execution of our growth strategies. With respect to cash flow, net cash provided by operating activities in the third quarter grew $41 million and free cash flow increased $42 million. These positive cash flow results were driven by strong business performance and earnings growth. As always, we expect to generate a large inflow in the fourth quarter, primarily from Collegiate Hospitality and Sports & Entertainment. The higher cash flow generation in the quarter enabled us to proactively repay $100 million of term loans subsequent to the quarter end. We remain committed to achieving a leverage ratio below 3x by fiscal year-end. We will continue to pursue additional capital allocation opportunities with a focus on maximizing returns. At quarter end, the company had over $1.4 billion in cash availability. And finally, let me wrap up with our performance expectations for the remainder of fiscal '26, with only a few months to go. We are benefiting from the consistent execution of our teams across the business from industry-leading client retention to broad-based revenue growth across the U.S. and international to record levels of new client wins and the continued expansion of Aramark Nexus. Our sales pipeline remains substantial with first-time outsourcing at elevated levels. As a result, we have raised our fiscal '26 organic revenue growth outlook to an increase of 9% to 10%, reflecting continued momentum across Aramark's portfolio as well as the early contribution from commencing operations with a top global hyperscaler. We are also reaffirming our expectations for AOI growth of 12% to 17%, and adjusted EPS growth of 20% to 25%, both of which are aligned with Wall Street estimates as we look at the fourth quarter. We anticipate accelerated AOI growth and margin expansion in the fourth quarter, driven by our multiple operating levers and the early contribution from Aramark Nexus. We are mobilizing a record level of new business throughout the company and adding Aramark Nexus growth resources as appropriate to further capitalize on the significant new business opportunities before us. In summary, the strength of our financial performance this quarter, combined with the continued momentum we are seeing across the business, reinforces our confidence in Aramark's growth trajectory. We believe the company is well positioned to drive significant shareholder value creation. Thank you for your time this morning. Operator, we will now open up the call for questions. Operator: [Operator Instructions] Our first question comes from Curtis Nagle with Bank of America. Curtis Nagle: I guess first, just focusing on that additional Nexus contract, great numbers to hear, right, the 40% increase in scope, in new sites. I guess, would you be able to provide an update on potentially how much larger this contract could be? I think initially, we were thinking several hundred million? And would the duration of this contract also potentially expand longer than you might think? And then I'll have a follow-up. John Zillmer: Sure. The initial contract, we estimated at about $100 million annualized over the life of the contract -- I'm sorry, annually over the life of the contract. And with this 40% increase in scope, we expect it to be somewhere in the range of $140 million per year. The life expectancy of the contract, we continue to believe, is somewhere in the range of 4 to 5 years dependent upon the speed of development and also determined ultimately by the total number of employees that they bring on board. So very attractive contract, very attractive returns, as we've talked about. This is a capital-light strategy for us, immediately accretive to margins above company average and will be a strong contributor going forward. Curtis Nagle: Just a quick clarification. Just that's $100 million, I guess, now $140 million per site, right? John Zillmer: Per site, per year. That's the initial contract at that first site. The second site that we will be -- that we are currently beginning to mobilize will actually be slightly larger and approximately the same duration. So that would tend to be around $160 million a year based on the expected size of the second site. Curtis Nagle: Got it. Okay. I guess just more of a holistic question, just your confidence in being able to maintain this, call it, 9% to 10% organic growth range. Just look at your current book of business, right, the 1.6, the retention normalized pricing and then let alone perhaps more upside from data centers, it seems like it's pretty achievable in the next year, but just -- yes, it would be great to your level of confidence there. James Tarangelo: Yes. Again, we're -- the metrics on new business are great, record levels of new business at this point in the year, exceptional retention levels, we're seeing broad-based growth, and as you mentioned, on top of that, the Nexus business that we are mobilizing. If you look at the underlying growth rate in Q3, excluding the calendar shift, it's in the 10% to 11% range. I think you'll see implied at a similar level for the fourth quarter. So that's all very sustainable, and that's exactly how we're thinking about the exit rate and the outlook as we think about 2027. Operator: Our next question comes from Lizzie Dove of Goldman Sachs. Elizabeth Dove: Congrats on a great print. I just wanted to ask more now that you're, kind of, several months into this, some great updates on Nexus. Like, any latest thoughts on just how to think about the TAM that you have? And within that, kind of, addressable market, how you think about your, kind of, market share opportunity within that specifically? John Zillmer: Sure. I think total addressable market is something we're still working on. But obviously, there are hundreds of these projects that are currently under consideration for construction across the United States and elsewhere around the world. So I think to extrapolate to the total addressable market is a little bit difficult at this stage. We do think it's in the many billions of dollars in terms of the total addressable market, and we'll continue to refine those estimates as we get a better understanding of the actual construction pace and the implementation across the U.S. But right now, we feel like we're very well positioned in this segment. We are investing in resources to go ahead and bring this business to life. We've already established a very good leadership structure, committed sales resources against this business. And so I like our positioning. We currently have 8 sites that are signed and under active development in various stages. So there is a lot of runway to this business. I also think that this business is going to be very large, and it's -- I think we'll achieve very significant share gains very rapidly. But I do think this will be a competitive marketplace, and there's more than enough room for all the companies who serve these industries to succeed given the demand that appears to be out there. Elizabeth Dove: Great. And then great to hear that it sounds like the 9% to 10% range you feel is sustainable over the next year. I guess any way that we should think about margins specifically on the impact of that on Nexus? It sounds like you've said in the past that Nexus margins are accretive. They're higher than the total company right now. But then I guess there's still maybe a bit of a ramp phase. And so, kind of, putting those pieces together, I am not asking for guidance, but just any way to think about as we move into '27 and longer term, how we think about, kind of, margin impact from all of this? James Tarangelo: Yes. I think the -- certainly, the Nexus opportunity and the above company margin certainly will be a tailwind to the longer-term picture on margins. We've been consistently generating 30 to 40 basis points of margin accretion, and that's implied by the guidance for this year as well. As John mentioned, we're mobilizing 2 sites with a large hyperscaler, the colocator on top of that. The first site alone expected to add about $150 million of revenues. So it is the $400 million to $500 million of revenue that will ramp up over the course of fiscal '27 and into '28 with above company margins. So that's how we're thinking about it. So it will certainly be a tailwind to that picture. John Zillmer: Yes. And I would just add, Lizzie, that we're committed to, as we have said over the past, we're committed to seeing significant margin accretion in the core business without the impact of Nexus. Nexus will be additive and we feel very good about that positioning, but we're also very much focused on continuing the margin expansion that exists in the core business that comes just through the normal growth of the organization as well as the supply chain discipline and SG&A leverage. So we continue to have expectations in that 30 to 40 basis point range on the core business in addition to the margin accretion that will come from Nexus. Operator: Our next question comes from Ian Zaffino with Oppenheimer. Ian Zaffino: Really good quarter. Question, I guess, if we could maybe move away from Nexus for just a second here. It does seem like the broader portfolio in general has had just a ton of success here. I don't know how to explain other than just, kind of, firing on all cylinders here, but maybe talk about what the greatest opportunities you're seeing out there, again, putting Nexus aside and, kind of, focusing on the core business. John Zillmer: Sure. Thanks for the question, Ian. We absolutely do see continued growth in the core business. We've had very strong selling season across the enterprise, both domestically and internationally, experiencing very strong growth and very active pipelines across the range of the portfolio. So I think we've maintained our commitment to each of the businesses. We're driving performance. We've got a great management team in place, and we're executing well in terms of serving our customers' needs through adding new solutions every day. So we continue to see great opportunities in the health care sector as continued self-op conversion takes place. We see continued expansion in the collegiate sports area. But we're experiencing growth in all of our businesses, even those that have been highly contracted for a long period of time. We're seeing exceptional growth in workplace experience, both domestically and internationally. So feel very confident in the long-term growth trajectory of the organization and believe our long-term prospects are excellent. Ian Zaffino: Okay. And then I'm going to ask a question here on Nexus. I just, kind of, want to be -- and I appreciate you guys are being prudent and, kind of, disciplined in managing, I don't know, call it, maybe some expectations here. But when we think about just the business in general and maybe again, the margins, why are the margins higher? Is it a factor of -- or maybe let me ask it differently, how do we expect margins to ramp? Typically, in the core business, we see some dilution as you win large contracts initially and then it, kind of, ramps throughout the contract. Is that something similar we're going to see here? And how should we, kind of, wrap our brains around this, so we, kind of, keep everything in check and our expectations in line with Nexus and what you're seeing actually on the ground, et cetera? James Tarangelo: Yes, sure. So the -- there is some moderate ramp with Nexus as we ramp up the number of folks that we are serving. But the primary underlying structure of these contracts is cost reimbursable. We don't want to get into too much detail for competitive reasons, but that's how we structured them. The margins are attractive, especially if you compare it to some of the smaller players in the industry, margins are actually much higher than that on their model. So it's low capital intensity with that cost reimbursable primarily. There are some moderate costs upfront, but it scales much faster than a sort of a typical, say, higher education or sports contract so that we have very good visibility into the margins, very predictable. So there's not significant start-up costs like we see typically in a contract of that size. Operator: Our next question comes from Leo Carrington with Citi. Leo Carrington: Some follow-ups on the AI data center progress you've made. Firstly, that point about the scope of work on the hyperscaler contracts having increased 40%. Can you give some more color on what kind of services you've been able to add? And how this came about? Is there scope for further increases with the -- in terms of scope with the hyperscaler? John Zillmer: No, really -- I'm sorry, go ahead and finish, Leo. Leo Carrington: I was just going to ask a sort of similar question on the colocator side. It'd be interesting just to hear the similarities and differences versus the hyperscaler contract. And if there is anything you can add in terms of the revenue opportunity for this colocator contract versus the numbers for the hyperscaler one you've already given us. John Zillmer: Sure. Typically, what drives the difference in scale is the number of people expected to be employed on site, which you could roughly translate into beds. Remember, these are residential communities. These are workforce communities that are being created in remote areas. And so you can, kind of, think of the number of beds as being, kind of, an indicator of scale and scope. So our initial site was originally projected to be about 3,500 employees. The increase in size and scale is directly related to the number of beds that they will have on site. So second location estimated to be 4,000 beds. The colocator site originally looking at, like, 4,500 beds. So that's the primary driver. The scope of services that we'll be offering across the communities is consistent. It's essentially hospitality, food, retail, housekeeping, facilities management, unarmed security, which we will subcontract and not perform ourselves, but that's not included in our revenue estimates. So it's a full suite of amenities and services provided to those people who are residing in these communities in a remote environment. So scope is very broad. I think fitness centers, pickleball courts, basketball courts, volleyball. It's a community that we're building. So the best indicator of overall size of the scope of a contract is related to the number of people or number of beds that are affiliated with the site. We currently have essentially under contract with those first 3 locations, approximately 12,000 to 13,000 beds, and they can scale up or down based on the size of the facility that's being built. Operator: Our next question comes from Andrew Steinerman with JPMorgan. Andrew Steinerman: I just wanted to maybe touch on the medium-term algo. I surely haven't heard the figures in maybe about a year's time. But for a long time, we were talking about a medium-term 5% to 8% organic revenue growth algo. Surely, you're growing faster than that now and into next year. My question is, how has the whole portfolio evolved to a point where the medium-term algorithm has to be increased? John Zillmer: I'll start, Andrew. I mean the algo, as you mentioned, is -- has been 5% to 8%, right? That's the growth we need to fuel the 30 to 40 basis points. We're obviously operating well above that this year as we exit into '27 as well, and we're evaluating and continue to update in terms of what that algorithm will be. If you look at the components of growth on that, right, the main change there is obviously the net new impact, right? If you look at the quarter, we're now realizing the 5% to 6% net new realized, right, continuing with the pricing, say, 3.5%, volume 1% to 2%, minus calendar shift for this quarter, obviously. But that's generally how we're thinking about the quarters, and we're in the early stages of planning for fiscal '27. But certainly, the expectation is that we'll be operating above the algorithm that we initially established as part of Investor Day. Andrew Steinerman: Okay. That's good. Could I just ask a real quick second one. New bookings that you just talked about, just give an update on the mix between your, kind of, self-op conversions versus competitive winaways. John Zillmer: Yes. I think it's probably consistent with our past disclosures. We're somewhere in the range of 40% to 45% self-op conversions. What will skew that number up is whether or not you would call Nexus, which isn't really included in those numbers yet, a self-op conversion. It's a brand-new site, first-time outsourcing. So hard to really characterize it one way or the other. But I would say in the core business, we're still seeing in that range of 40% to 45% self-op conversion. Operator: Our next question comes from Toni Kaplan with Morgan Stanley. Toni Kaplan: I wanted to start off on Nexus. It sounds like you have a really complete service offering there. I was hoping you could just talk about the differentiation that you're able to provide because I'm sure a number of your large competitors are also trying to go after that business. And so I was hoping you could talk about maybe what customers have really liked and what makes your offering more unique or differentiated. John Zillmer: Yes. Sure. I'll take that, Toni. First of all, yes, there are a couple of smaller companies that are currently competing in this space. And I think the differentiated offerings that we brought to bear when we began to work with this global hyperscaler was a significantly differentiated hospitality approach that transitioned from a typical, call it, chow line, if you will, to a much more retail-oriented fine dining approach that offers a range of opportunities for those employees that are living there. So it's not just walking through a cafeteria line for breakfast, lunch and dinner. It's having multiple outlets and multiple opportunities to choose how you want to be served, whether it's a full-service restaurant, or whether it's buffet style or whether it's some other, kind of, retail component. So what we brought to bear was a very significant change in the approach, and that's what they recognized and that's the, kind of, quality that they wanted to achieve. And their reason for doing so is pretty obvious. They want to recruit and retain high-quality, high numbers of employees in remote environments. And to do that, they wanted to give them a solution that was significantly enhanced from the norm. And so we were able to deliver -- design and deliver and execute against that kind of an approach, including those other amenity offerings, which are consistent with what we do for our own employees in the National Parks, what we do in remote mines in Chile, in Canada. So it was bringing to bear that full suite of capabilities. The other companies that focus on this segment have typically been construction-oriented organizations that focus more on the build as opposed to the hospitality. We're not in the build business. We're there to support the build business through our infrastructure, but we're there to provide hospitality for the employees. And that was the key differentiator. Toni Kaplan: Terrific. And shifting gears to sports, terrific quarter there. I know you called out World Cup in the release. I wanted to also understand how much of sort of the growth there was attributable to World Cup, but also wanted to find out about any sort of recent wins because you also talked about expanding the client portfolio in sports. So any recent wins for new teams, that would be awesome. James Tarangelo: Yes. It was really a strong quarter in general for the sports group. The underlying performance in Major League Baseball is good. We have a number of teams vying for the playoffs at this point. We've -- in terms of the new business, Florida State University Athletics and Texas State Athletics were rolled out as part of the new business. We had -- did have significantly more playoff games in the NHL and NBA this year with the Spurs obviously going to the championship. And as John mentioned, we did have about 15 World Cup games in the quarter as well. So all that combined really led to the strong double-digit growth that we saw in excess of double-digit growth in sports this quarter. So really, the underlying strength is strong. The World Cup had a sort of a moderate impact as well. But all told, the combined business is really what drove the exceptional performance. Operator: Our next question comes from Jasper Bibb with Truist Securities. Jasper Bibb: On Nexus, I just wanted to clarify how many sites you're signed up for right now? I think you said 2 with each, 2 on the hyperscale side, 2 with colocation, but I thought I heard 8 sites total signed in response to an earlier question. So just wanted to clarify how many, kind of, total sites you have signed up on the Nexus side. And then if it's 8, I guess I'm wondering what the time line might be looking like for the sites that are signed but aren't active or mobilizing today. John Zillmer: Yes. So we have the 2 sites that we're currently mobilizing with the top global -- top hyperscaler, sorry, and with a third under discussion. And then there are 5 additional sites with the AI colocator that are in various stages of development, one which will begin to ramp up in early '27. The total number of beds, if you were to extrapolate the number of beds for those additional 5 sites, you would estimate around 2,000 per site. So somewhere in the range of between 12,000 and 20,000 total beds under development at this point in time with the first 3 sites really under active engagement. Jasper Bibb: Awesome. And then my second question was just, I guess I'm wondering if you could bridge the increased organic growth guide against reaffirming AOI and EPS ranges. Is that a little bit of new business start-up on some of these wins? Is that some selling commission because new business is up so much? John Zillmer: Yes, that's right. Yes, the increase in the guide really just a general broad-based favorable trends we're seeing in the business. And obviously, we put in the Nexus impact into the fourth quarter as well on the top line. On AOI and EPS, as you said, we're rolling out and mobilizing record levels of new business and the businesses that hit the fourth quarter in particular. So higher education, we've had one of the best selling seasons in recent memory, and those accounts will ramp up in August and September. In Destinations, we have Stone Mountain, one of the largest accounts we've rolled out in many years. And then in health care, we continue to ramp up Robert Wood Johnson. So with that, as we always talked about, there is some mobilization costs and those margins will ramp up into fiscal '27. Operator: Our next question comes from Jaafar Mestari with BNP Paribas. Jaafar Mestari: I just wanted to start by clarifying one thing. You mentioned in the release that your initial Aramark Nexus site has begun providing revenue, but there's reasonable sources out there that would suggest that, that's July. So I just wanted to make it extra clear that in Q3, in the 11% organic growth, there is no contribution from Nexus. James Tarangelo: Yes, it did ramp up, but the first site with the hyperscaler did ramp up in late fiscal Q3. So just a very moderate amount, small amount affected July. Primarily, it's going to be in the fourth quarter. Jaafar Mestari: Okay. Super. And I guess related to that, you've mentioned 2 clients, 3 firm sites, another 5 sites under discussion, and you said $400 million to $500 million revenue that could be ramping up over the next 2 years. I just wanted to make sure they're all on the same definition. And if those figures, $400 million to $500 million in particular, are included in the signings figure, $1.6 billion, how should we look at the signings ex Nexus, the core businesses ex Nexus last year in '25 signed $1.6 billion? So I know there's a few months left to the year. But yes, if I do very quick math. Is it $1.1 billion, $1.2 billion of signings in your core segments of education, health care, corporate, et cetera? And is it a good figure if you did $1.6 billion with those same segments last year? James Tarangelo: Yes, I'll start. Yes, in terms of -- again, we're not getting into too much detail on the components of the $1.6 billion. There's a portion of that $450 million in there, a relatively small portion that's built in that is in the $1.6 billion. Just on the revenue question, just to confirm, right, we talked about 3 sites mobilizing -- in active mobilization and development, the 2 with a hyperscaler and one with the colocator. Those 3 sites is where I was referencing the $400 million to $500 million. And as John mentioned, there's additional sites and opportunities with the colocator. That's not part of the $400 million to $500 million. That's the annualized value. We're still planning in terms of when that will ramp up over the course of '27. But no, the underlying new business is driven by the core, excluding Nexus. Jaafar Mestari: Yes. And sorry to labor that point, but what's the definition reason why is the $400 million to $500 million are all based on 3 sites that are the most defined, the firmest. Why is it not all included in your $1.6 billion signings? James Tarangelo: Yes. At this point, we -- some of it has to get into the weeds. So some has to do when we finalize contracts versus develop and roll them out. So there's just some particular things that we adhere to in terms of when we actually record the new business. Operator: Our next question comes from Faiza Alwy with Deutsche Bank. Faiza Alwy: I wanted to follow up on Nexus also. I guess you talked about sales resources that you're putting into this particular business. And I'm just curious how, kind of, you're approaching the go-to-market and, kind of, how the competitive environment has evolved. It sounds like a lot of your core larger competitors are not participating in the same way that you are. And I'm just curious if that's -- how you're viewing that and if it's more related to just your go-to-market approach? John Zillmer: Yes. I think, first of all, we recognized very quickly the attractiveness of the market and began to frame an organization to serve it very, very quickly. So we installed a CEO for the business who is an experienced Aramark executive who's run multiple businesses and has an extraordinary background related to hospitality. And so recognizing the attractiveness of it, we also committed resources from the sales organization to this go-to-market strategy, particularly related to this initial set of contracts. And as we began to explore the potential and the size of the market, we began to add additional sales resources focused on the other hyperscalers as well as other key participants in the industry, whether that's construction and engineering or other related firms. So I do expect that the other large companies will find a way into the business. They have divisions that do some of these things in other parts of the world. I just think we were first to move in recognizing the significance of the opportunity and established a business very quickly. But I fully expect that this will be a competitive marketplace. I also -- as I said earlier, I also believe that the size and the scope of this total market is so large and the demand will be so significant that there's plenty of room for all the organizations to be successful competing in it. And we want to be first. We want to be the biggest, and we want to get our fair share. But ultimately, I think this will be competitive. Faiza Alwy: Understood. And then not to belabor the point around contribution from Nexus this year. But just want to understand in the fourth quarter, like, do you expect to fully ramp at, at least the initial 2 sites where -- or is it a slower buildup? Just trying to get a sense of how much revenue contribution you're expecting from Nexus in the fourth quarter. James Tarangelo: Yes. Roughly in the fourth quarter, that probably about 1% or so will come from Nexus. None of the sites are fully ramped up yet. So they all will be ramping up to their peak during the course of fiscal '27. John Zillmer: Sorry, I would just add a couple of comments on this. The ramp-up schedule is really not something that we are in control of. It is based on how these companies bring employment to bear in the site. So the ramp-up schedule is one that we're still working to define. And so it -- we'll be able to provide more clarity as we get through the fourth quarter and into the planning for fiscal '27. Operator: Our next question comes from Justin Hauke with Baird. Justin Hauke: I just have one here. I guess just given the geographical concentration that you called out for Nexus and being in Texas and with the development pipeline that you have of those, I guess, the 5 additional sites, not so much the 3 that are, kind of, under a firmer commitment. But I'm just curious about the Texas governor recently putting in a moratorium or an audit on some of the new developments and just, I guess, your thoughts on that and if there's any exposure on, kind of, that development pipeline you have right now? John Zillmer: Yes. I would say there's no exposure on the development pipeline that we have under active development that we expect that the regulatory environment will continue to evolve across multiple states. I do think the state of Texas is very committed to the business in particular, and that they will -- that these projects which are already under construction and already underway will comply with whatever regulatory requirements are established by the state. That's the risk that the hyperscaler has, not us in providing service to them. So it could defer or delay a little bit implementation or the rollout of various projects. But we think in the long term, the demand for these services, the demand for compute capacity in addition to the AI compute capacity that's being built will have to be met. And so we'll -- we want to participate. We believe that it's going to be a strong marketplace. And we think the regulatory risks are -- will get managed. These facilities have to be built over time. And so we want to be there to support the customers as they build them. Operator: Our next question comes from Josh Chan with UBS. Joshua Chan: Great quarter. Maybe on Nexus, could you talk about the hundreds of sites that are technically possible, but why you ended up with these locations? Are they the largest? Are they -- do they make the most sense geographically? Just, kind of, like, how did you end up with these 8? John Zillmer: Well, that would be -- unfortunately, that would be revealing some competitive insights and information that I really prefer not to do. I will say that we began the relationship with this top global hyperscaler as a result of a reach out from them to us. And it was to focus on these sites that they had under active development and active planning. And so we pursued them aggressively and we were awarded these sites by that top global hyperscaler. And so in addition to that, this colocator is developing sites, and we are under contract or under an agreement with them for those 5 additional sites. And again, those relationships were established as a result of the competitive process. So again, we're trying to take advantage of this marketplace in a very efficient way, and we're also trying to keep our competitive advantage close to the vest, if you will. And so I think that's about all I can say. Joshua Chan: Okay. I appreciate that. And then I guess on the retention side, 98% through Q3 seems to be quite good. I guess what's driving this? And then how does the retention pipeline look like as you, kind of, go into next year? John Zillmer: I think it's execution and performance. Obviously, it speaks to the strength of our customer relationships and the quality of the performance that we bring to bear every day. We are hyper focused on doing the right thing in terms of serving our customers and our clients. And this has been the focus of the organization for the last 5 years, and we've continued to get better and better at it. It's something that we hold our people accountable for and hold accountable to, and we compensate them for. So as you know, 40% of our incentive comp is related to net new, which is a complete measurement, which is focused on retention and growth. And when you focus incentives on something, it gets done. And so we're very proud of the retention rate. We look at this literally every month, and we think it's service and execution that drives it. Operator: Our next question comes from Shlomo Rosenbaum with Stifel. Shlomo Rosenbaum: There's a lot of focus on Nexus and for good reason. But I want to go back to one of the questions about the rest of the business that seems to be getting a little bit overshadowed about the fact that you seem to be having really good bookings and really good execution there. I was wondering if you could parse out the 51% of growth year-to-date in bookings. If you were to strip out those Nexus bookings, what kind of growth would we be looking at just on the core business? And I know you talked a lot about the strength in the education business. And we've been through the strongest selling season. Is that continuing as well? And then I have a follow-up. James Tarangelo: Yes, I'll start. Like I said, the increase in new business, the record levels of new is primarily driven by the core business, right? So there's only a small piece of Nexus in that. But as you said, it's been broad-based. In B&I, we continue to see record levels of new business, both in the underlying corporate business as well as the vending and refreshment services. Collegiate, as we talked about, had a record selling season and mentioning and opening the accounts that we talked about. Health care, second year in a row, right? Last year, we had Penn; this year, RWJ Barnabas. So health care has really picked up the levels of net new business. In Destinations, as I mentioned, Stone Mountain, one of the largest wins they've had in recent memory as well. And then broad-based growth across the international portfolio, right? Nearly, I think it's over 5 years of double-digit growth, strength across all the large countries, Europe, in particular. From an industry perspective, done really well in broadening out our Sports & Entertainment business in Europe, both in terms of underlying soccer and then now festivals and concerts. And then remote services, strength in Canada in the sands, in the mining business in Chile and then the offshore business in Europe. So broad-based across the portfolio in terms of geographies and sectors. Shlomo Rosenbaum: Okay. Great. And then just getting back to free cash flow, that is a metric you used to give out in terms of guidance. And you haven't given it out recently, and I was wondering if you can just give us some direction on what to expect because clearly, the revenue is outperforming, the margin is expanding. And how should we think about where the free cash flow should go this year? And how should we be thinking about it over the next several years? And then frankly, you're going to get to your target of below 3x leverage. How should we be thinking about that? Is that going to be funneled more into driving additional organic growth in terms of pursuing more Nexus contracts? Should we see dividend raises? Should we see more share repurchases? Just how should we think about the scope, magnitude of free cash flow and what you're going to use it for? James Tarangelo: Yes, I'll start with really the foundation for the capital structure strategy has been to be under 3x levered. There's a clear line of sight to achieving that by year-end. I think it's the lowest -- I've been with the company over 20 years. I think it's the lowest leverage we've had during my tenure. So we like where we are in terms of the capital structure. On free cash flow, I talked about targeting a conversion rate of about 40% of AOI. So that gives you a sense of where that will be. As we grow levels we are, there may be a little bit more of a moderate use of working capital, again, a good problem to have. Capital expenditures have been in the 3% -- I think it's closer to 3.5% this year as a result of the record levels of new business. And as you model that out over the coming year, ample capital there to continue to invest in growth. But again, it's been pretty consistent capital at 3.5%. With respect to M&A, we'll continue to be targeted and disciplined. And then we'll have capital to potentially accelerate share repurchases in the coming year as well as we balance that all out. But again, the foundation of that is really getting under 3x levered. Operator: There are no further questions at this time. I'd like to turn the call back over to Mr. Zillmer for closing remarks. John Zillmer: Again, well, thank you, everybody, for the support of the company and for joining us this morning. I'd like to say thank you again to the dedicated Aramark family around the world. Thank you for all your performance for everything you've done for the organization and your commitment to serving your customers and each other. Again, thank you very much, and good day. Operator: Thank you for participating. This concludes today's conference. You may now disconnect. Before you buy stock in Aramark, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Aramark wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $409,970!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,381,040!* That performance is why people listen. With a track record of beating the S&P 500 by nearly 5x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 18, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Aramark (ARMK) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Aramark’s second quarter results saw a positive market reaction, reflecting the company’s ability to deliver strong revenue growth above Wall Street expectations. Management attributed the 9.3% year-over-year sales increase to robust client retention, broad-based demand across U.S. and international segments, and significant new business wins—particularly in sports, education, and workplace experience. CEO John Zillmer cited “industry-leading client retention at record levels of approximately 98%,” and highlighted the expansion of Aramark Nexus, the company’s hospitality platform for workforce communities and AI data centers. Is now the time to buy ARMK? Find out in our full research report (it’s free). Revenue: $5.06 billion vs analyst estimates of $4.94 billion (9.3% year-on-year growth, 2.4% beat) Adjusted EPS: $0.52 vs analyst estimates of $0.48 (7.2% beat) Operating Margin: 4.3%, in line with the same quarter last year Market Capitalization: $16.29 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Curtis Nagle (Bank of America) asked about the scale and duration of Nexus contracts. CEO John Zillmer explained each site is expected to generate $140–$160 million annually over 4–5 years, with margins above company average. Elizabeth Dove (Goldman Sachs) inquired about the total addressable market for Nexus. Zillmer estimated it to be in the “many billions of dollars,” with Aramark currently signed to 8 sites and investing in sales resources to capture additional market share. Ian Zaffino (Oppenheimer) questioned margin ramp dynamics for Nexus. CFO James Tarangelo described Nexus contracts as cost-reimbursable with limited start-up costs and more rapid margin realization compared to traditional segments. Leo Carrington (Citi) probed the factors driving the 40% increase in hyperscaler contract scope. Zillmer explained that the primary driver is the number of employees (beds) at each site, with services including food, hospitality, and amenities tailored to workforce communities. Andrew Steinerman (JPMorgan) sought clarification on the mix of self-operated conversions versus competitive wins in new business. Zillmer said 40–45% of core new wins come from self-op conversions, with Nexus representing new outsourcing rather than conversions. In future quarters, the StockStory team will be monitoring (1) the pace of Nexus site mobilization and its impact on revenues and margins, (2) continued execution and retention in core business segments, particularly education and sports, and (3) the evolution of Aramark’s sales pipeline, especially in international and high-growth hospitality markets. Regulatory developments affecting data center construction and the company’s ability to sustain high levels of new business signings will also be key markers of progress. Aramark currently trades at $61.83, up from $55.71 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members). WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.

In the past week, Aramark reported fiscal third-quarter 2026 results showing sales rising to US$5,057.91 million and net income to US$97.66 million, alongside an earnings beat, a raised full-year outlook, a new long-term University of Colorado Colorado Springs dining partnership, a US$0.12 dividend declaration, and the appointment of Macy’s CEO Antony Spring to its Board. Investors are closely watching how Aramark’s expanding Nexus data center hospitality business, record client retention near 98%, and growing pipeline of new contracts could reshape its longer-term growth profile and risk mix. Now we’ll assess how Aramark’s strong earnings beat and higher full-year guidance update influence its existing investment narrative and risk balance. We've uncovered the 9 dividend fortresses yielding 5%+ that don't just survive market storms, but thrive in them. To own Aramark, you need to believe it can turn steady contract wins, high client retention, and newer areas like Nexus data center hospitality into durable earnings, despite thin margins and labor cost pressure. The latest earnings beat and higher 2026 guidance reinforce that near term, the key catalyst is execution on organic growth and Nexus ramp up, while the biggest risk remains cost inflation and labor intensity across a rapidly expanding contract base. The new long term University of Colorado Colorado Springs dining partnership fits directly into that growth story, adding to Aramark’s higher education footprint alongside record retention near 98%. For investors focused on catalysts, contracts like this show how campus hospitality and large institutional deals can stack up into multi year revenue, while also expanding the company’s exposure to wage, food cost, and service quality pressures across more sites. Yet behind the strong quarter and upbeat guidance, investors should still be aware of how quickly inflation or labor disruptions could pressure already thin margins and... Read the full narrative on Aramark (it's free!) Aramark's narrative projects $24.1 billion revenue and $812.4 million earnings by 2029. Uncover how Aramark's forecasts yield a $61.56 fair value, in line with its current price. Some of the lowest analysts were assuming Aramark would reach about US$23.2 billion in revenue and US$803.8 million in earnings by 2029, yet still question whether Nexus data center opportunities and today’s 98% retention truly offset rising cost and execution risks, reminding you that reasonable views on the same earnings beat can differ sharply and may shift again as new information comes in. Explore 3 other fair value estimates on Aramark - why the stock might be worth 47% less than the current price! Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts. A great starting point for your Aramark research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision. Our free Aramark research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Aramark's overall financial health at a glance. Early movers are already taking notice. See the stocks they're targeting before they've flown the coop: Uncover the next big thing with 19 elite penny stocks that balance risk and reward. Find 49 companies with promising cash flow potential yet trading below their fair value. Explore 25 top quantum computing companies leading the revolution in next-gen technology and shaping the future with breakthroughs in quantum algorithms, superconducting qubits, and cutting-edge research. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ARMK. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Organic revenue growth reached 9% to $5 billion, with underlying performance exceeding 10% when adjusting for a temporary calendar shift in the education sector. Achieved industry-leading client retention at a record level of approximately 98%, which management attributes to a hyper-focus on service execution and incentive structures aligned with net new business. New client wins totaled more than $1.6 billion fiscal year-to-date, representing a 51% increase over the prior year, driven by strong demand in Collegiate Hospitality and Healthcare. Launched Aramark Nexus to capture the emerging AI data center market, providing premium hospitality and workforce community services for global hyperscalers and colocation providers. International organic revenue increased 11%, driven by broad-based performance led by Spain, Canada, the U.K., and Germany. and expansion in remote mining services across Canada and Chile. Global supply chain and GPO business delivered over $1.1 billion in annualized new spend, benefiting from multinational clients consolidating procurement to leverage Aramark's scale. Raised fiscal 2026 organic revenue growth guidance to 9% to 10%, reflecting strong core momentum and early contributions from the Nexus hyperscaler contract. Expects accelerated AOI growth and margin expansion in the fourth quarter as record levels of new business from the summer selling season begin to mobilize. Anticipates Aramark Nexus will contribute approximately $400 million to $500 million in annualized revenue as the initial sites ramp up through fiscal 2027 and into fiscal 2028. Maintains a target of 30 to 40 basis points of annual margin accretion in the core business, with Nexus expected to be additive and margin-accretive due to its capital-light, cost-reimbursable structure. Committed to reaching a leverage ratio below 3x by fiscal year-end, which management believes will provide flexibility for targeted M&A and potential share repurchases. A calendar shift in the education sector negatively impacted third-quarter organic revenue by approximately 2% and AOI by $20 million, though these are expected to be fully recaptured in Q4. The Nexus business model utilizes a cost-reimbursable structure to mitigate risk and ensure predictable margins, though management noted that ramp-up schedules are dependent on client hiring paces. Inflation trends have remained slightly more favorable than original expectations across most operating regions. Management acknowledged potential regulatory risks regarding data center development in certain states but believes high demand for compute capacity will sustain the long-term project pipeline. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management clarified that the initial hyperscaler site scope increased by 40% to approximately $140 million per year, with a second site estimated at $160 million. The contracts are primarily cost-reimbursable and capital-light, leading to margins that are immediately accretive and above the company average. Revenue scales based on the number of 'beds' or employees at remote workforce communities, with current signed sites representing 12,000 to 20,000 total beds. Management expressed high confidence in maintaining growth above their historical 5% to 8% algorithm, citing a 5% to 6% realized net new business impact. The 'exit rate' heading into 2027 is supported by a record selling season in Collegiate Hospitality and a substantial pipeline of first-time outsourcing opportunities. Aramark distinguishes itself from construction-focused competitors by offering high-end, retail-oriented dining and full-suite amenities like fitness and recreation. The strategy focuses on helping tech clients recruit and retain skilled labor in remote environments through superior hospitality experiences rather than just basic food service. Upon reaching the sub-3x leverage target, the company will focus on a balanced approach including organic growth investment, disciplined M&A, and returning capital to shareholders. Free cash flow conversion is targeted at approximately 40% of AOI, though high growth may lead to moderate temporary uses of working capital.

Aramark (ARMK) came out with quarterly earnings of $0.52 per share, beating the Zacks Consensus Estimate of $0.48 per share. This compares to earnings of $0.4 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +8.33%. A quarter ago, it was expected that this provider of food, facilities and uniform services would post earnings of $0.47 per share when it actually produced earnings of $0.49, delivering a surprise of +4.26%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Aramark, which belongs to the Zacks Retail - Restaurants industry, posted revenues of $5.06 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 2.24%. This compares to year-ago revenues of $4.63 billion. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Aramark shares have added about 51.1% since the beginning of the year versus the S&P 500's gain of 13.3%. While Aramark has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Aramark was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.76 on $5.26 billion in revenues for the coming quarter and $2.24 on $19.97 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Retail - Restaurants is currently in the bottom 31% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Arcos Dorados (ARCO), is yet to report results for the quarter ended June 2026. The results are expected to be released on August 13. This restaurant owner is expected to post quarterly earnings of $0.15 per share in its upcoming report, which represents a year-over-year change of +36.4%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Arcos Dorados' revenues are expected to be $1.28 billion, up 12.1% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Aramark (ARMK) : Free Stock Analysis Report Arcos Dorados Holdings Inc. (ARCO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Aramark (NYSE:ARMK) reported better-than-expected fiscal third-quarter 2026 results on Tuesday, supported by broad-based organic growth, strong new business wins and record client retention. Adjusted earnings per share reached $0.52, beating the analyst consensus of $0.48 by $0.04. Revenue climbed 9% year on year to $5.1 billion, exceeding expectations of $4.92 billion and rising from $4.6 billion in the prior-year quarter. Despite the earnings and revenue beats, Aramark shares were little changed in pre-market trading, slipping 0.18% following the announcement. Organic revenue increased 9% from a year earlier, reflecting momentum in the existing business alongside new contract wins across multiple sectors and geographic markets. The comparison was affected by a calendar shift related to the 53rd week in fiscal 2025, which Aramark estimated reduced reported revenue growth by around two percentage points, primarily within Education. Excluding that effect, revenue growth would have been approximately 11%. Fiscal year-to-date new client wins exceeded $1.6 billion, representing a 51% increase from the comparable period last year. Client retention remained at a record level of approximately 98%, providing additional support for the company’s revenue base. Adjusted operating income increased 13% on a constant-currency basis to $261 million, while operating margin expanded by nearly 20 basis points. “The Company delivered another impressive quarter of strong top and bottom-line results,” said CEO John Zillmer. “We continue to build on the momentum across the portfolio, including industry-leading client retention, broad-based revenue growth in the U.S. and International, record levels of new client wins, and the continued expansion of Aramark Nexus.” The combination of higher revenue, operating income growth and modest margin expansion indicates that Aramark continued to convert its commercial momentum into improved operating performance during the quarter. Food and Support Services United States generated revenue of $3.5 billion, an increase of 8% year on year. Growth was led by Sports, Leisure & Corrections, Business & Industry, and Healthcare. Food and Support Services International performed even more strongly, with revenue advancing 13% to $1.6 billion. Aramark reported broad-based growth across Spain, Canada, the U.K. and Germany. The geographic spread of the gains reduces reliance on any single market and supports management’s view that growth momentum is extending across the portfolio. Following the third-quarter performance, Aramark increased its fiscal 2026 organic revenue growth forecast to between 9% and 10%, compared with its previous range of 7% to 9%. The company maintained its outlook for adjusted operating income growth of 12% to 17% and adjusted EPS growth of 20% to 25%, both measured on a constant-currency basis. The midpoint of the EPS growth forecast remains aligned with Wall Street expectations. For investors, the raised revenue outlook is a key takeaway from the quarter. Strong new business wins, approximately 98% client retention and growth across both U.S. and international operations provide visibility into the company’s top-line momentum, while the reaffirmed profit guidance puts the focus on whether Aramark can continue expanding earnings and margins as revenue grows. Aramark stock price