Critical Analysis: Aramark (NYSE:ARMK) & Kura Sushi USA (NASDAQ:KRUS)

Aramark (NYSE:ARMK) and Kura Sushi USA (NASDAQ:KRUS) are both consumer discretionary companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, analyst recommendations, risk, valuation and dividends.

Risk and Volatility

Aramark has a beta of 1.1, indicating that its stock price is 10% more volatile than the S&P 500. Comparatively, Kura Sushi USA has a beta of 1.38, indicating that its stock price is 38% more volatile than the S&P 500.

Profitability

This table compares Aramark and Kura Sushi USA’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Aramark	1.93%	17.68%	4.21%
Kura Sushi USA	-1.41%	-0.85%	-0.42%

Analyst Ratings

This is a summary of current recommendations for Aramark and Kura Sushi USA, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Aramark	0	3	12	0	2.80
Kura Sushi USA	2	6	4	1	2.31

Aramark currently has a consensus target price of $68.82, indicating a potential upside of 27.83%. Kura Sushi USA has a consensus target price of $60.22, indicating a potential upside of 131.53%. Given Kura Sushi USA’s higher possible upside, analysts clearly believe Kura Sushi USA is more favorable than Aramark.

Earnings and Valuation

This table compares Aramark and Kura Sushi USA”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Aramark	$18.51 billion	0.77	$326.39 million	$1.43	37.65
Kura Sushi USA	$328.28 million	0.96	-$4.64 million	($0.38)	-68.45

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

Insider and Institutional Ownership

65.5% of Kura Sushi USA shares are owned by institutional investors. 2.8% of Aramark shares are owned by company insiders. Comparatively, 2.3% of Kura Sushi USA shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Aramark beats Kura Sushi USA on 10 of the 15 factors compared between the two stocks.

About Aramark

Aramark provides food and facilities management services to organizations around the world. Its clients include schools and universities, hospitals and other healthcare providers, businesses, sports and entertainment venues, and correctional institutions. The company plans and operates dining programs, including meal preparation, catering, concessions, and retail food services. It also provides facilities services such as maintenance, cleaning, and related operational support tailored to client needs.

About Kura Sushi USA

Kura Sushi USA, Inc. operates Japanese-style revolving sushi restaurants in the United States under the Kura Revolving Sushi Bar name. Its restaurants serve sushi and other Japanese dishes, including sashimi, ramen, tempura and desserts. The company’s restaurants combine a conveyor-belt dining format with technology-enabled ordering. Guests can select dishes from a rotating belt or order through a touch-screen system, with orders delivered directly to their tables. Kura Sushi USA began operating in 2008 and opened its first restaurant in Irvine, California.