To The Moon

$UniFirst(UNF)$ is expected to release its quarterly earnings for fiscal Q2 2025 on 02 April 2025 before the market open.

UNF revenues are projected to reach $603.04 million, increasing 2.1% from the same quarter last year. The earnings per share for upcoming quarter is anticipated to come in at $1.34 which would be an increase of 7.4% compared to same period last year.

Here are some of the key metrics to watch for the upcoming quarterly reporting.

• Organic Growth: Core uniform rental revenue trends.

• Margins: Impact of inflation and efficiency initiatives.

• Guidance: Management’s outlook for FY 2025 (revenue: 2.425–2.44billion; EPS: 6.79–7.19).

UniFirst (UNF) Last Neutral Earnings Saw Its Share Price Decline By 14.85%

UNF had a neutral earnings call on 08 Jan 2025 which saw its share price decline by 14.85% since.

The earnings call presented a mix of positive financial metrics and growth in specific segments, offset by challenges such as declining net wearer levels and increased costs. The company's confidence in future growth and value creation opportunities was noted, despite a challenging pricing environment.

UniFirst (UNF) Guidance On Solid Balance Sheet Maintained

During UniFirst Corporation's Q1 2025 earnings call, several key financial metrics were highlighted. The company reported first-quarter revenues of $604.9 million, marking a 1.9% increase from the previous year. Operating income rose by 4.5% to $55.5 million, while adjusted EBITDA saw a 5.9% increase to $94 million. Net income for the quarter improved to $43.1 million, or $2.31 per diluted share. The Core Laundry Operations segment contributed $532.7 million in revenues, a 1.7% rise, and maintained an operating margin of 8.1%. Specialty Garments and First Aid segments also reported revenue growth of 2.9% and 5.4%, respectively.

UNF maintained a solid balance sheet with no long-term debt and $181 million in cash and equivalents, while operating cash flows increased by 27.3%. Looking ahead, UniFirst expects fiscal 2025 revenues between $2.425 billion and $2.440 billion and diluted EPS between $6.79 and $7.19, despite a challenging pricing environment affecting retention rates.

Factors Influencing Q2 2025 Earnings :

Economic Conditions: Demand for uniforms ties to labor markets and industrial activity. Specialty Garments segment revenues increased by 2.9%, and First Aid segment revenues increased by 5.4%.

Net wearer levels for existing customers declined, showing some incremental weakness compared to a year ago.

Cost Management: Inflation in labor/materials and pricing strategies.

First quarter revenues were $604.9 million, an increase of 1.9% from fiscal 2024. Operating income and adjusted EBITDA increased by 4.5% and 5.9%, respectively, compared to the first quarter of fiscal 2024. Operating cash flows increased by 27.3% compared to the same quarter a year ago.

Higher health care costs and legal environmental expenses partially offset the improvements in operating income and adjusted EBITDA.

M&A Activity: Potential acquisitions to boost growth (e.g., Clean Uniform acquisition in 2023).

Competition: Pressure from rivals like Cintas (CTAS) and Aramark. A more challenging pricing environment has developed, impacting retention rates and overall growth in core laundry operations.

UniFirst (UNF) Price Target

Based on 2 Wall Street analysts offering 12 month price targets for UniFirst in the last 3 months. The average price target is $187.00 with a high forecast of $194.00 and a low forecast of $180.00. The average price target represents a 7.47% change from the last price of $174.00.

The challenges that UNF need to face would include the upcoming tariffs on 02 April, as we can see that UNF already faced pricing challenge, with the tariffs it would make it more difficult for UNF to navigate this headwinds.

Technical Analysis - Exponential Moving Average (EMA)

As we can see that UNF is affected greatly by the concerns of the incoming tariffs proposed by President Trump, so we might be able to see a good growth in its garments sector.

But what could be bring the share price down further could be the guidance that might point to a weaker 2025 because of the tariffs affecting UNF pricing.

From the technicals, UNF need an earnings surprise to bring the share price closer to the 200-day period as RSI is now in oversold region which signal very weak momentum.

We might want to watch this stock for some opportunities if the tariffs on 02 April is being implemented at much softer rate.

Summary

UNF challenging pricing environment is a concern especially with tariffs coming on, this company have a solid balance sheet which makes it a good quality stock to consider. So if we are able to see softer tariffs implementation and it can continue to create value.

Then we can consider this stock for long term with its current share price at a discount, but do exercise caution first as I expect the market to create another bottom.

Appreciate if you could share your thoughts in the comment section whether you think UNF can beat the earnings estimates and bring a surprise to its share price.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.