Why G&K Services' Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of branded apparel provider G&K Services jumped 10% today after the company released earnings.

So what: Fiscal second-quarter revenue was up 5.6% from a year ago to $229.2 million, beating expectations of $226 million. On the bottom line, the company reported earnings of $0.68 per share, which beat estimates by $0.08. It also raised fiscal 2013 guidance to earnings of $2.50 to $2.60 per share, from $2.25 to $2.25 previously.

Now what: That's the rare earnings trifecta -- beating on the top line, bottom line, and guidance. I'm a little concerned about what investors are paying after the big jump today, though. Shares trade at 15.5 times 2013 guidance, a steep price for a low level of revenue growth. I'd be a buyer on a pullback, but today it's just too expensive for me.

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The article Why G&K Services' Shares Jumped originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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