Aramark (ARMK) Q3 FY2026: They Raised The Guide That Doesn’t Pay You

Aramark (ARMK) Q3 FY2026 — Q3 FY2026 (quarter ended July 3, 2026): revenue $5,057.9M, +9.3%, organic +8.6%, above the $4,936M bar. Adjusted diluted EPS $0.52 vs a $0.4847 bar, +30.0%. GAAP diluted EPS $0.36, +34.4%. Aramark RAISED FY2026 organic revenue guidance to +9-10% and only REAFFIRMED adjusted operating income, adjusted EPS and leverage. Stock +9.69% across three sessions, to a twelve-month closing high of $61.11. Aramark beat on revenue and on adjusted EPS and raised its full-year organic revenue outlook to +9-10%. It did not raise the adjusted operating income guide, the adjusted EPS guide or the leverage target. The release says Q4 will be consistent with Wall Street. The Street is at $0.75, and $1.52 of filed nine-month adjusted EPS plus $0.75 is $2.27 - the floor of the reaffirmed +20-25% range. THE CALL: AVOID (3/5, REVENUE GUIDE RAISED, EPS GUIDE HELD AT THE FLOOR) — base-case value ~$53.0 vs ~$61.11 today. KEY METRICS: - CALL: AVOID, 3/5. Fair value ~$53 against the $61.11 close on Aug 13, about 13% below. Street: 21 buy, 2 hold, 1 sell; 9 targets in the last 30 days average $68.89, published consensus $67.70 in a $55-$74 range. Bull $79, bear $34. We differ on method: we price cash to an owner, the Street prices EBITDA. - THE QUARTER: revenue $5,057.9M, +9.3% (organic +8.6%) vs a $4,936M bar. FSS United States $3,496.4M, +7.7%; FSS International $1,561.5M, +13.2%. Operating income $215.6M, +18.1%. Adjusted operating income $260.8M, +13.3%, margin 5.2%. Adjusted diluted EPS $0.52 vs $0.4847, +30.0%. GAAP diluted EPS $0.36, +34.4%. Client retention ~98%, a record; new client wins over $1.6B YTD, +51%. - THE EPS BASIS AND THE GUIDANCE ARITHMETIC: the three FY2026 adjusted quarters $0.51 + $0.49 + $0.52 equal the reported nine-month adjusted EPS of $1.52, so the beat is like-for-like; the GAAP gap is $37.9M of amortisation, $5.6M of severance and $1.7M of other charges, less $2.8M of tax. Q4 is guided to the Street's $0.75, and $1.52 + $0.75 = $2.27 = +20.1% on FY2025's $1.89 - the floor of the +20-25% range (the AOI guide of +12-17% was also only reaffirmed). The top needs $0.84. - THE CALENDAR SHIFT AND THE CASH: FY2025 held a 53rd week; the shift removed $80.8M of revenue and $20.1M of operating income, almost all in Education. Ex-shift, revenue grew 11.1% and adjusted EPS 42.9% in constant currency ($0.57). Q3 free cash flow +$8.7M vs -$33.6M; nine-month FCF -$588.1M, while Q4 FY2025 alone delivered +$1,051.7M. FY2025 FCF was $454.5M. Net debt $5,630.4M, leverage 3.5x from 4.0x; $100M of term loans repaid post-quarter. What to watch: UP: a fourth quarter of $0.80 or better against the $0.75 the company endorsed, or a first disclosed revenue and margin figure for Aramark Nexus. DOWN: Q4 adjusted EPS at or under $0.75 alongside Q4 operating cash flow below last year's $1,175.6M. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision. Learn investing free in the Charged Alpha app: https://chargedalpha.com/app?source=youtube&ref=video Educational only. Not financial advice.