Contrasting Aramark (NYSE:ARMK) & Secom (OTCMKTS:SOMLY)

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

Analyst Recommendations

This is a breakdown of current ratings and target prices for Secom and Aramark, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Secom	0	0	0	0	0.00
Aramark	0	2	7	0	2.78

Aramark has a consensus target price of $48.38, indicating a potential upside of 24.34%. Given Aramark’s stronger consensus rating and higher possible upside, analysts clearly believe Aramark is more favorable than Secom.

Earnings & Valuation

This table compares Secom and Aramark”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Secom	$7.88 billion	2.19	$713.52 million	$0.43	21.51
Aramark	$18.51 billion	0.55	$326.39 million	$1.19	32.69

Secom has higher earnings, but lower revenue than Aramark. Secom is trading at a lower price-to-earnings ratio than Aramark, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Secom has a beta of 0.29, suggesting that its share price is 71% less volatile than the S&P 500. Comparatively, Aramark has a beta of 1.06, suggesting that its share price is 6% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Secom	8.60%	7.50%	5.08%
Aramark	1.69%	16.15%	3.75%

Dividends

Secom pays an annual dividend of $0.10 per share and has a dividend yield of 1.1%. Aramark pays an annual dividend of $0.48 per share and has a dividend yield of 1.2%. Secom pays out 23.3% of its earnings in the form of a dividend. Aramark pays out 40.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Aramark has raised its dividend for 1 consecutive years. Aramark is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Aramark beats Secom on 10 of the 15 factors compared between the two stocks.

About Secom

SECOM CO., LTD., together with its subsidiaries, provides security services in Japan and internationally. The company operates through Security Services, Fire Protection Services, Medical Services, Insurance Services, Geospatial Information Services, BPO and ICT Services, and Other Services. The Security Services segment offers static guard, armored car, merchandise, and other services, as well as online security systems. The Fire Protection Services segment provides fire alarm systems, fire extinguishing systems, and maintenance services to office buildings, production facilities, tunnels, cultural properties, ships, and residences. The Medical Services segment offers home nursing, pharmaceutical dispensing, home delivery services, health and preventative care services, and personal and outpatient care services; and cloud-based medical reporting services and SECOM LINKus application. This segment also operates the general hospital and residences for seniors; and sells medical equipment and pharmaceuticals. The Insurance Services Segment provides fire insurance, automobile insurance, and cancer treatment insurance services. The Geospatial Information Services segment offers geospatial information services to public-sector entities, such as national and local governments; private sector customers; and overseas government agencies. The BPO and ICT Services segment provides contact centers and back office support services, data center, disaster preparedness, information security, and cloud-based services, as well as SaaS solutions. The Other Services segment offers real estate leasing, construction, and installation services. The company was incorporated in 1962 and is headquartered in Tokyo, Japan.

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.