Why Aramark Stock Plunged Today

By Steve SymingtonMarketsFool.com

Image source: Aramark

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What happened

Shares of Aramark (NYSE: ARMK) were down 9.5% as of 3:45 p.m. Tuesday after thefood, facilities and uniform services company reported weaker-than-expected fiscal fourth-quarter 2016 results.

So what

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Quarterly revenue fell slightly from the same year-ago period, to roughly $3.544 billion and -- based on generally accepted accounting principles (GAAP) -- translated to net income attributable to Aramark shareholders of $83.3 million, or $0.33 per diluted share. On an adjusted basis, Aramark's net income grew 11.9% year over year, to $122 million, or $0.49 per share.

By comparison, analysts' consensus estimates predicted roughly the same adjusted earnings, but on higher revenue of $3.67 billion.

Nonetheless, Aramark CEO Eric Foss focused on the company's strengths, stating:

Now what

Looking forward to fiscal year 2017, Aramark expects adjusted earnings per share to be in the range of $1.85 to $1.95 -- the midpoint of which sits slightly below analysts' expectations for 2017 adjusted earnings of $1.91 per share.

That's not to say these results were as terrible as Tuesday's big drop seems to indicate. But given the combination of its top-line shortfall for the fourth quarter, underwhelming guidance, and the fact that shares had risen more than 20% over the past year leading up to this report, it's no surprise to see Aramark investors taking a step back on Tuesday.

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Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.