Why UniFirst Shares Spiked
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 workplace clothing and protective work wear clothing supplier UniFirst soared as much as 17%, following the release of much better-than-expected first-quarter earnings results.
So what: For the quarter, UniFirst recorded a 6% rise in revenue, to $332.6 million, as profits rose 19%, to $1.54, thanks to an 8% improvement in its laundry operations revenue. Wall Street analysts had only been forecasting a profit of $1.33 for the quarter on $326.3 million in revenue, so this was a very sizable earnings beat. UniFirst also boosted its full-year EPS and revenue guidance to a range of $5.10-$5.25 and $1.34 billion-$1.35 billion, from its previous forecast of $4.65-$4.85 and $1.33 billion-$1.34 billion.
Now what: Today's earnings beat was undeniably large, but I have to ask the question, "Now what?" UniFirst doesn't exactly have a way to "innovate" itself to double-digit growth, and it pretty much needs the unemployment market to continue improving if it hopes to expand its operations and maintain pricing power. Even at the midpoint of its guidance, which places UniFirst at 16 times forward earnings, I can't say that I'd consider it a particularly intriguing value here.
Craving more input? Start by adding UniFirst to your free and personalized Watchlist, so you can keep up on the latest news with the company.
The article Why UniFirst Shares Spiked originally appeared on Fool.com.
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