A large exercise of company stock options by James Tarangelo, SVP and CFO at Aramark ARMK was disclosed in a new SEC filing on November 21, as part of an insider exercise.

What Happened: Tarangelo, SVP and CFO at Aramark, exercised stock options for 8,365 shares of ARMK stock. This information was disclosed in a Form 4 filing with the U.S. Securities and Exchange Commission on Thursday. The exercise price of the options was $20.67 per share.

As of Friday morning, Aramark shares are down by 4.85%, with a current price of $38.46. This implies that Tarangelo’s 8,365 shares have a value of $148,813.

Discovering Aramark: A Closer Look

Aramark provides food, facilities, and uniform services to a variety of clients and institutions. The majority of company revenue comes from its North American food and support services segment. Smaller but substantial segments include food and support services international, food and support services united states and uniform and career apparel. The food and support services segments provide food for school districts; colleges; healthcare facilities; correctional institutions; and business, sports, and entertainment venues. The uniform segment rents, delivers, cleans, and maintains work clothes and ancillary items like towels and mats to customers in North America and Japan. The company has hundreds of service locations and distribution centers across the United States and Canada.

A Deep Dive into Aramark’s Financials

Positive Revenue Trend: Examining Aramark’s financials over 3 months reveals a positive narrative. The company achieved a noteworthy revenue growth rate of 5.16% as of 30 September, 2024, showcasing a substantial increase in top-line earnings. As compared to its peers, the revenue growth lags behind its industry peers. The company achieved a growth rate lower than the average among peers in Consumer Discretionary sector.

Exploring Profitability:

• Gross Margin: The company faces challenges with a low gross margin of 8.99%, suggesting potential difficulties in cost control and profitability compared to its peers.

• Earnings per Share (EPS): With an EPS below industry norms, Aramark exhibits below-average bottom-line performance with a current EPS of 0.46.

Debt Management: Aramark’s debt-to-equity ratio is below the industry average. With a ratio of 1.83, the company relies less on debt financing, maintaining a healthier balance between debt and equity, which can be viewed positively by investors.

Valuation Overview:

• Price to Earnings (P/E) Ratio: The Price to Earnings ratio of 40.83 is lower than the industry average, indicating potential undervaluation for the stock.

• Price to Sales (P/S) Ratio: The current P/S ratio of 0.62 is below industry norms, suggesting potential undervaluation and presenting an investment opportunity for those considering sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): The company’s EV/EBITDA ratio of 13.05 trails industry averages, indicating a potential disparity in market valuation that could be advantageous for investors.

Market Capitalization Analysis: Reflecting a smaller scale, the company’s market capitalization is positioned below industry averages. This could be attributed to factors such as growth expectations or operational capacity.

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Why Insider Activity Matters in Finance

Emphasizing the importance of a comprehensive approach, considering insider transactions is valuable, but it’s crucial to evaluate them in conjunction with other investment factors.

In the realm of legality, an “insider” is defined as any officer, director, or beneficial owner holding more than ten percent of a company’s equity securities under Section 12 of the Securities Exchange Act of 1934. This includes executives in the c-suite and major hedge funds. These insiders are required to disclose their transactions through a Form 4 filing, to be submitted within two business days of the transaction.

Notably, when a company insider makes a new purchase, it is considered an indicator of their positive expectations for the stock.

Conversely, insider sells may not necessarily signal a bearish stance on the stock and can be motivated by various factors.

A Closer Look at Important Transaction Codes

Examining transactions, investors often concentrate on those unfolding in the open market, meticulously detailed in Table I of the Form 4 filing. A P in Box 3 denotes a purchase, while S signifies a sale. Transaction code C indicates the conversion of an option, and transaction code A denotes a grant, award, or other acquisition of securities from the company.

Check Out The Full List Of Aramark’s Insider Trades.

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This article was generated by Benzinga’s automated content engine and reviewed by an editor.