Critical Review: Star Buffet (STRZ) and Aramark (NYSE:ARMK)

Star Buffet (OTCMKTS:STRZ) and Aramark (NYSE:ARMK) are both retail/wholesale companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, profitability, analyst recommendations and valuation.

Analyst Ratings

This is a breakdown of current recommendations for Star Buffet and Aramark, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Star Buffet 0 0 0 0 N/A
Aramark 0 4 8 0 2.67

Aramark has a consensus target price of $40.64, indicating a potential upside of 16.80%. Given Aramark’s higher probable upside, analysts plainly believe Aramark is more favorable than Star Buffet.

Profitability

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

Net Margins Return on Equity Return on Assets
Star Buffet -2.08% N/A -7.95%
Aramark 3.27% 17.31% 3.89%

Dividends

Aramark pays an annual dividend of $0.44 per share and has a dividend yield of 1.3%. Star Buffet does not pay a dividend. Aramark pays out 22.1% of its earnings in the form of a dividend. Aramark has raised its dividend for 4 consecutive years.

Volatility & Risk

Star Buffet has a beta of 3.27, meaning that its share price is 227% more volatile than the S&P 500. Comparatively, Aramark has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500.

Insider & Institutional Ownership

97.3% of Aramark shares are held by institutional investors. 53.6% of Star Buffet shares are held by company insiders. Comparatively, 3.3% of Aramark shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Star Buffet and Aramark’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Star Buffet $26.04 million N/A -$540,000.00 N/A N/A
Aramark $15.79 billion 0.54 $567.88 million $1.99 17.48

Aramark has higher revenue and earnings than Star Buffet.

Summary

Aramark beats Star Buffet on 10 of the 13 factors compared between the two stocks.

Star Buffet Company Profile

Star Buffet, Inc. owns and operates full service restaurants in the United States. As of July 19, 2018, it operated 27 restaurants in 10 states. The company operates its restaurants under the 4B's, JB's, Barnhill's Salads Buffet Desserts, Casa Bonita, and BuddyFreddys names. Star Buffet, Inc. was founded in 1997 and is based in Scottsdale, Arizona.

Aramark Company Profile

Aramark provides food, facilities management, and uniform services to education, healthcare, business and industry, sports, leisure, and corrections clients in North America and internationally. It operates in three segments: Food and Support Services United States, Food and Support Services International, and Uniform and Career Apparel. The company offers managed services, including dining, catering, food service management, and convenience-oriented retail operations; non-clinical support services, such as patient food and nutrition, retail food, and procurement services; and plant operations and maintenance, custodial/housekeeping, energy management, clinical equipment maintenance, grounds keeping, and capital project management services. It also provides on-site restaurants, convenience stores, and executive dining services; beverage and vending services; and facility management services comprising landscaping, transportation, payment, 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. Additionally, the company offers correctional food, and food and facilities management services for parks; and operates commissaries, laundry facilities, and property rooms. It also provides design, sourcing and manufacturing, delivery, cleaning, maintenance, and marketing services for uniforms and accessories; provides managed restroom services; and rents uniforms, work clothing, outerwear, particulate-free garments, and non-garment items and related services that include mats, shop towels, and first aid supplies. The company was formerly known as ARAMARK Holdings Corporation and changed its name to Aramark in May 2014. Aramark was founded in 1959 and is based in Philadelphia, Pennsylvania.

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