Critical Contrast: Sodexo (OTCMKTS:SDXAY) & Aramark (NYSE:ARMK)

Aramark (NYSE:ARMK) and Sodexo (OTCMKTS:SDXAY) are both mid-cap business services companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, analyst recommendations, valuation, earnings, risk, institutional ownership and profitability.

Dividends

Aramark pays an annual dividend of $0.48 per share and has a dividend yield of 1.3%. Sodexo pays an annual dividend of $0.39 per share and has a dividend yield of 3.6%. Aramark pays out 39.3% of its earnings in the form of a dividend. Aramark has raised its dividend for 1 consecutive years.

Valuation & Earnings

This table compares Aramark and Sodexo”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Aramark	$18.51 billion	0.54	$262.52 million	$1.22	31.02
Sodexo	$26.49 billion	0.30	$765.33 million	N/A	N/A

Sodexo has higher revenue and earnings than Aramark.

Volatility and Risk

Aramark has a beta of 1.24, suggesting that its share price is 24% more volatile than the S&P 500. Comparatively, Sodexo has a beta of 0.73, suggesting that its share price is 27% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Aramark and Sodexo, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Aramark	0	2	4	1	2.86
Sodexo	2	7	0	0	1.78

Aramark currently has a consensus target price of $45.67, indicating a potential upside of 20.67%. Given Aramark’s stronger consensus rating and higher possible upside, analysts clearly believe Aramark is more favorable than Sodexo.

Profitability

This table compares Aramark and Sodexo’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Aramark	2.02%	15.67%	3.67%
Sodexo	N/A	N/A	N/A

Summary

Aramark beats Sodexo on 10 of the 14 factors compared between the two stocks.

About Aramark

Aramark provides food and facilities services to education, healthcare, business and industry, sports, leisure, and corrections clients in the United States and internationally. It operates through two segments, Food and Support Services United States, and Food and Support Services International. The company offers food-related managed services, including dining, catering, food service management, and convenience-oriented retail services; non-clinical food and food-related support services, such as patient food and nutrition, retail food, environmental services, and procurement services; and plant operations and maintenance, custodial/housekeeping, energy management, grounds keeping, and capital project management services. It also provides on-site restaurants, catering, convenience stores, and executive dining services; beverage and vending services; and facility management services comprising landscaping, transportation, capital program management, payment services, and other facility consulting services relating to building operations. In addition, the company offers concessions, banquet, and catering services; retail services and merchandise sale, recreational, and lodging services; and facility management services at sports, entertainment, and recreational facilities. Further, it offers correctional food; and operates commissaries, laundry facilities, and property rooms. It primarily serves business and industry, sports, leisure and corrections, education, healthcare, public institutions, manufacturing, transportation, service, and other industries. The company was formerly known as ARAMARK Holdings Corporation. Aramark was founded in 1959 and is based in Philadelphia, Pennsylvania.

About Sodexo

Sodexo S.A. provides food services and facilities management services worldwide. It offers various on-site services, which includes corporate services, energy and resources, government and agencies, and other services; healthcare and seniors; and learning solutions to schools and universities. The company also provides food services comprising retail service, food delivery, and meal and food vouchers, as well as digital food ordering services; savings and purchase solutions, data and digital tools, and advisory services and client support; and work-life balance and employee experience solutions. In addition, it offers facility management services, including technical service management, assets management, building maintenance, access control, deep cleaning, energy management, space planning, project management, front-of-house services, grounds maintenance, waste management, HVAC systems, mail management, commercial cleaning, workspace management, and pest control. services. The company was formerly known as Sodexho Alliance and changed its name to Sodexo S.A. in 2008. Sodexo S.A. was founded in 1966 and is headquartered in Issy-les-Moulineaux, France.