$Aramark (ARMK.US)$In the past five years, revenue has fluctuated slightly with a average growth rate of only 2.3%. Operating profit has shrunk by 22% due to a decline in gross margin over the past five years, and it even suffered a loss in 2020. Net income has been in the negative for two years in 2020 and 2021, and it turned profitable in 2022.
In 2022, accounts receivable increased by 0.4 billion and inventory increased by 0.14 billion, while net income was only 0.19 billion.
In the first two quarters of 2023, revenue increased by 17.9%, operating profit increased by 35.2%, and net income increased by 66.5% to reach 0.13 billion. During the same period, inventory increased by 0.04 billion and accounts receivable increased by 0.21 billion, indicating a very unhealthy growth rate for accounts receivable.
Goodwill and other intangible assets amount to 7.674 billion, which is more than twice the net assets of 3.191 billion. Long-term borrowings amount to 7.907 billion, indicating a very high leverage.
The current PE ratio is 51, and the TTM PE ratio has dropped to 40. Although the recent growth rate is very high, it is more prudent to observe for a few more quarters considering the situation of the balance sheet.