Revenge of the Creepy Janitor! (ARMK)

In grade school there was Mr. Kent, a man everybody knew had done time.

In high school there was Dean, a younger broomsweep, of whom it was rumored he was once a junkie.

However you slice it, the janitor will always be one of those people from whom children get a funny feeling.

And that’s what makes today’s trade such a beauty.

—————————————-

Aramark (NYSE:ARMK) pretty much does it all, providing the food, prep, cleanup, maintenance, groundskeeping and custodial services to institutional clients of every stripe.

Even prisons.

Linens, towels and uniforms are also available.

So it’s easy to understand why such an agile and weighty outfit would find itself as one of Evil George Soros’ top holdings.

(Yep, it’s true.  Look it up.  Number six on his list, in fact.)

It also forms the basis of today’s 4900% trade—in potentia…

Yet, fundamentally, there are issues.

For example:

• P/E on this vacuum cleaner is a ridiculous 58.54—with a forward P/E of just 17.74—meaning: the consensus believes either earnings will grow by 66% or price will fall by two thirds by next February.  Take your pick.  And consider the economic/geopolitical environment while you’re at it.
• Dividend Yield is 1.00% even.
• Price to Book comes in at 3.74.
• Debt to Equity is a gargantuan 2.45 (not good in a rising rate environment), and…
• We don’t understand how a normal earnings year after several years of Batflu misfortune should earn a company such enthusiasm.  Especially since the last five years witnessed 12.80% losses per annum.

ARMK will release its Q1 numbers on February 7^th.  That’s tomorrow.

And we say they won’t be what the cheerleaders expect.

Expect tears.

Here’s the chart—

May it be His will.

With kind regards,

Hugh L. O’Haynew

Follow @HughLOHaynew