G&K Services Beats Up on Analysts Yet Again

Seth Jayson, The Motley Fool
Updated

G&K Services (NAS: GKSR) reported earnings on Jan. 31. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q2), G&K Services beat slightly on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue improved and GAAP earnings per share dropped.

Gross margins contracted, operating margins dropped, and net margins increased.

Revenue details
G&K Services reported revenue of $217.1 million. The seven analysts polled by S&P Capital IQ anticipated revenue of $213.1 million. Sales were 6.4% higher than the prior-year quarter's $204.1 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $0.51. The six earnings estimates compiled by S&P Capital IQ forecast $0.47 per share on the same basis. GAAP EPS of $0.51 for Q2 were 8.5% higher than the prior-year quarter's $0.47 per share.

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Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 29.7%, 160 basis points worse than the prior-year quarter. Operating margin was 7.8%, 30 basis points worse than the prior-year quarter. Net margin was 4.4%, 20 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $218.7 million. On the bottom line, the average EPS estimate is $0.51.

Next year's average estimate for revenue is $863.1 million. The average EPS estimate is $1.95.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 30 members out of 34 rating the stock outperform, and four members rating it underperform. Among nine CAPS All-Star picks (recommendations by the highest-ranked CAPS members), nine give G&K Services a green thumbs-up.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on G&K Services is outperform, with an average price target of $37.

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At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. 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.

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