If you’re an investor in Aramark, the provider of food and hospitality services for professional sports teams, here’s some news that should grab your attention. It turns out that the performance of certain teams in the World Series can have a significant impact on Aramark’s business and stock value.
The Teams to Watch
According to BofA Securities analyst Heather Balsky, Aramark is directly involved with three out of the 12 teams that made the Major League Baseball playoffs in 2023. These teams are the Houston Astros, the Philadelphia Phillies, and the Toronto Blue Jays.
Balsky’s research shows that Aramark provides concessions at Minute Maid Park in Houston, Citizens Bank Park in Philadelphia, and Rogers Centre in Toronto. This means that if these teams advance to the World Series, Aramark stands to benefit greatly.
Positive Outlook for Aramark
Given this exciting opportunity, Balsky has reiterated her buy rating on Aramark’s stock (ARMK), with an optimistic new price target of $47, reflecting a potential 95% upside from current levels. It’s worth noting, however, that the stock has experienced a 3.7% slump recently, its lowest close since March 22.
The Impact of Playoff Games
Historically, playoff games have been “swing factors” for Aramark’s U.S. food and facilities business, according to Balsky. In fact, these games have influenced adjusted earnings per share by at least a penny in either direction.
Although a penny might not seem significant, FactSet data reveals that Aramark has beaten EPS expectations by a penny five times over the past nine quarters. This consistency is commendable and underscores the potential impact of playoff games.
Anticipated Revenue Boost
Based on the current 2023 playoff schedule, Aramark could potentially host up to 31 games, assuming an optimal scenario where Houston or Toronto plays Philadelphia in the World Series. At a minimum, the company will host four playoff games, assuming Philadelphia loses the Wild Card series and Houston loses in the Division Series.
With Rogers Centre having the most seats at 54,000, followed by Citizens Bank Park at 42,901 and Minute Maid Park at 41,000, Balsky estimates that, with sold-out games and a per capita spending of $30, the baseball playoffs could add between $5 million to $39 million to Aramark’s fiscal first-quarter revenue, representing a 10-to-80 percentage point boost.
Aramark’s Current Status
Despite the positive outlook for Aramark’s involvement in the World Series, it’s important to note that the company’s stock has dropped 19.3% year to date, while the S&P 500 index has gained 9.9%.
As an investor, it’s crucial to keep an eye on Aramark’s performance and how it aligns with the World Series results. This exciting opportunity could potentially lead to a significant upswing in stock value and revenue for Aramark, making it an attractive prospect for investors seeking growth.
