Aramark investors should root for an Astros-Phillies World Series rematch, or a Blue Jays surprise, analyst says

By Tomi Kilgore

Aramark provides concessions at baseball stadiums of three teams in the playoffs: Houston Astros, Philadelphia Phillies and Toronto Blue Jays

If you're an investor in the shares of Aramark, which provides food and hospitality services for many professional sports teams, then you should be rooting for the Houston Astros and the Philadelphia Phillies to return to the World Series.

It would be even better if the Toronto Blue Jays made a surprise run to replace the Astros in the championship series.

Of the 12 teams that made Major League Baseball's playoffs in 2023, BofA Securities analyst Heather Balsky noted that Aramark provides concessions at the stadiums of three of those teams: Minute Maid Park in Houston, Citizens Bank Park in Philadelphia and Rogers Centre in Toronto.

Balsky reiterated her buy rating on Aramark's stock (ARMK), as her new price target of $47, up from $35, implying 95% upside from current levels. Meanwhile, the stock slumped 3.7% in afternoon trading, which put it on track for the lowest close since March 22.

In the past, Balsky said the baseball playoff games have been "swing factors" for Aramark's U.S. food and facilities business, and have moved adjusted earnings per share up or down by at least a penny.

While that might not seem like a lot, over the past nine quarters, Aramark has beat EPS expectations by a penny five times, matched expectations three times and missed by a penny once, according to FactSet data.

"Based on the current [2023 playoff] schedule, [Aramark] could host up to 31 games (vs. 20 last year), assuming the optimal scenario where Houston or Toronto play Philadelphia in the World Series," Balsky wrote in a note to clients. "At a minimum, Aramark will host four playoff games, assuming Philadelphia loses the Wild Card series and Houston loses in the Division Series."

Of the three Aramark stadiums, Rogers Centre has the most seats at 54,000, followed by Citizens Bank Park at 42,901 and Minute Maid Park at 41,000.

Based on the assumption that all games sell out, and per capita spending is $30, Balsky sees the baseball playoffs adding $5 million to $39 million, or a 10-to-80 percentage point boost to fiscal first-quarter revenue.

Aramark's stock has dropped 19.3% year to date, while the S&P 500 index SPX has gained 9.9%.

-Tomi Kilgore

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10-03-23 1435ET

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