UniFirst (UNF) AI Stock Analysis

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UniFirst

(NYSE:UNF)

72Outperform

UniFirst's strong financial performance and positive earnings outlook are key strengths, contributing significantly to its overall score. The financial stability, low leverage, and efficient cash generation enhance its investment appeal. However, technical analysis indicates a bearish trend, and valuation metrics suggest moderate attractiveness. The positive earnings call indicates potential for future growth, despite some operational challenges. Overall, UniFirst is well-positioned for stability and growth, though technical trends warrant caution.

Positive Factors

Core Business

Better-than-expected operating performance in the core laundry business is expected to continue.

Earnings

Adjusted EPS increased 14%, to $1.40, above the consensus estimate.

Financial Performance

The quarter was good with revenues and Adjusted EPS beating consensus estimates.

Negative Factors

Growth Projection

Initial F2025 revenue guidance assumes less than 2% Core Laundry organic revenue growth, which is a deceleration.

Investment Strategy

IT/ERP investments will continue through 2027 without meaningful contribution to margins until 2028.

Revenue Outlook

Management reduced its top-line outlook by $5.5 million at the midpoint.

UniFirst (UNF) vs. S&P 500 (SPY)

Market Cap

$2.92B

Dividend Yield0.83%

Average Volume (3M)147.01K

Price to Earnings (P/E)20.3

Beta (1Y)0.58

Revenue Growth5.04%

EPS Growth31.69%

CountryUS

Employees16,000

SectorIndustrials

Sector Strength63

IndustrySpecialty Business Services

Share Statistics

EPS (TTM)8.04

Shares Outstanding15,007,187

10 Day Avg. Volume261,312

30 Day Avg. Volume147,014

Financial Highlights & Ratios

PEG Ratio0.64

Price to Book (P/B)N/A

Price to Sales (P/S)1.50

Price to Cash Flow (P/CF)15.80

P/FCF Ratio15.20

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$181.67

Price Target Upside11.17% Upside

Rating ConsensusHold

Number of Analyst Covering4

UniFirst Business Overview & Revenue Model

Company DescriptionUniFirst Corporation provides workplace uniforms and protective work wear clothing in the United States, Europe, and Canada. The company operates through U.S. and Canadian Rental and Cleaning, Manufacturing, Specialty Garments Rental and Cleaning, and First Aid segments. It designs, manufactures, personalizes, rents, cleans, delivers, and sells a range of uniforms and protective clothing, including shirts, pants, jackets, coveralls, lab coats, smocks, and aprons; and specialized protective wear, such as flame resistant and high visibility garments. The company also rents and sells industrial wiping products, floor mats, facility service products, and dry and wet mops; restroom and cleaning supplies comprising air fresheners, paper products, gloves, masks, sanitizers, and hand soaps; and other textile products. In addition, it provides first aid cabinet services and other safety supplies; decontaminates and cleans work clothes, and other items that is exposed to radioactive materials; and services special cleanroom protective wear and facilities. Further, it offers a range of garment service options, including full-service rental programs in which garments are cleaned and serviced; lease programs in which garments are cleaned and maintained by individual employees; and purchase programs to buy garments and related items directly. The company serves automobile service centers and dealers, delivery services, food and general merchandise retailers, food processors and service operations, light manufacturers, maintenance facilities, restaurants, service companies, soft and durable goods wholesalers, transportation companies, healthcare providers, government agencies, research and development laboratories, high technology companies, and utilities operating nuclear reactors, as well as others who require employee clothing for image, identification, protection, or utility purposes. UniFirst Corporation was founded in 1936 and is headquartered in Wilmington, Massachusetts.

How the Company Makes MoneyUniFirst Corporation generates revenue primarily through its uniform rental and sales services. The company operates a highly efficient industrial laundry network that allows it to provide uniform laundering and delivery services on a weekly basis, ensuring convenience for its clients. Revenue streams include long-term rental agreements where customers pay a recurring fee for uniform rental and maintenance, as well as direct sales where customers purchase uniforms outright. Additionally, UniFirst offers complementary services such as facility service products, including floor mats, mops, and restroom supplies, which provide additional revenue. Strategic partnerships with suppliers and a focus on customer service contribute to its earnings, allowing UniFirst to maintain a competitive edge in the uniform rental and services market.

UniFirst Financial Statement Overview

Summary

UniFirst presents a strong financial profile with consistent revenue growth, robust profitability, and a solid balance sheet with low leverage. The company's efficient cash generation and low debt levels enhance its financial flexibility. While gross profit margins show minor pressure, the overall financial health remains excellent, positioning it well for future growth and stability within the corporate services industry.

Income Statement

Very Positive

UniFirst's income statement reflects strong profitability with a gross profit margin of 30.9% and a net profit margin of 6.0% in the TTM. Revenue growth is robust, increasing by 10.0% from 2023 to 2024. EBIT and EBITDA margins stand at 7.6% and 13.6% respectively, indicating efficient cost management. The company shows consistent revenue growth and stable profitability, positioning it well within the industry, although the slight decline in gross profit from the previous annual period suggests some margin pressure.

Balance Sheet

Very Positive

UniFirst's balance sheet is solid, with a low debt-to-equity ratio of 0.03, indicating minimal leverage. The equity ratio is strong at 79.0%, reflecting a stable capital structure. Return on equity is healthy at 6.9%, showcasing efficient use of equity to generate profits. Overall, the balance sheet highlights strong financial stability with low risk due to modest leverage and high equity levels.

Cash Flow

Positive

The cash flow statement indicates positive trends with a free cash flow growth rate of 38.2% from 2023 to 2024. The operating cash flow to net income ratio of 2.1 suggests strong cash generation relative to net income. However, the substantial capital expenditures impact free cash flow, which could be a concern if not managed properly. Overall, cash flows are robust, supporting ongoing operations and investments.

TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Breakdown
Income Statement		Total Revenue
2.44B	2.43B	2.23B	2.00B	1.83B	1.80B
	Gross Profit
752.34M	847.60M	751.75M	694.37M	684.94M	639.23M
	EBIT
185.87M	183.58M	133.51M	134.28M	195.82M	172.73M
	EBITDA
331.73M	325.01M	262.03M	244.10M	302.76M	278.36M
	Net Income Common Stockholders
146.25M	145.47M	103.67M	103.40M	151.11M	135.77M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
180.98M	175.08M	89.60M	376.40M	512.87M	474.84M
	Total Assets
2.70B	2.70B	2.57B	2.43B	2.38B	2.20B
	Total Debt
67.49M	68.81M	64.76M	51.67M	43.17M	41.83M
	Net Debt
-98.76M	-92.76M	-14.68M	-324.73M	86.35M	83.66M
	Total Liabilities
568.11M	587.90M	566.01M	512.10M	508.11M	457.90M
	Stockholders Equity
2.13B	2.11B	2.00B	1.92B	1.87B	1.74B
Cash Flow		Free Cash Flow
186.36M	134.85M	43.77M	-21.67M	78.66M	169.97M
	Operating Cash Flow
307.72M	295.27M	215.76M	122.65M	212.30M	286.68M
	Investing Cash Flow
-160.07M	-162.24M	-487.65M	-186.51M	-141.47M	-157.62M
	Financing Cash Flow
-57.80M	-50.36M	-25.84M	-69.44M	-34.26M	-41.10M

UniFirst Technical Analysis

Technical Analysis Sentiment

Negative

Last Price163.41

Price Trends

50DMA

204.82

Negative

100DMA

200.87

Negative

200DMA

191.94

Negative

Market Momentum

MACD

-9.67

Positive

RSI

29.56

Positive

STOCH

28.06

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For UNF, the sentiment is Negative. The current price of 163.41 is below the 20-day moving average (MA) of 189.28, below the 50-day MA of 204.82, and below the 200-day MA of 191.94, indicating a bearish trend. The MACD of -9.67 indicates Positive momentum. The RSI at 29.56 is Positive, neither overbought nor oversold. The STOCH value of 28.06 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for UNF.

UniFirst Risk Analysis

UniFirst disclosed 27 risk factors in its most recent earnings report. UniFirst reported the most risks in the “Production” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

UniFirst Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
UNF	72 Outperform	$2.92B	20.31	7.17%	0.83%	5.04%	31.69%
GHC	72 Outperform	$4.03B	5.65	17.48%	0.75%	8.52%	281.17%
MSM	68 Neutral	$3.97B	18.75	15.53%	4.72%	-5.71%	-31.93%
VMI	68 Neutral	$5.32B	15.43	24.05%	0.93%	-2.38%	141.60%
CTAS	68 Neutral	$76.85B	44.16	40.15%	0.79%	7.79%	19.09%
ARW	66 Neutral	$4.79B	12.69	6.78%	―	-15.66%	-54.03%
Sector *	62 Neutral	$7.26B	12.38	3.01%	3.40%	3.58%	-14.13%

* Industrials Sector Average

Performance Comparison

UNF

UniFirst

163.41

0.11

0.07%

ARW

Arrow Electronics

92.34

-35.17

-27.58%

CTAS

Cintas

190.33

22.27

13.25%

MSM

MSC Industrial

71.22

-20.34

-22.21%

VMI

Valmont

265.28

41.62

18.61%

GHC

Graham Holdings

923.93

173.62

23.14%

UniFirst Earnings Call Summary

Earnings Call Date: Apr 2, 2025 | % Change Since: -6.81% | Next Earnings Date: Jun 25, 2025

Earnings Call Sentiment Positive

The earnings call presented a largely positive outlook with significant improvements in revenue, profitability, and cash flow. Customer retention and new business installations showed positive trends, along with strategic investments and expansions. However, there were challenges such as declining net wearer levels, higher health care costs, and reduced margins in the specialty garment segment.

Highlights

Revenue and Profitability Growth

Second quarter consolidated revenues were $602.2 million, an increase of 1.9% from fiscal 2024. Operating income and adjusted EBITDA increased by 11.7% and 6.3%, respectively. Net income for the quarter increased to $24.5 million from $20.5 million.

Improved Cash Flow

Operating cash flow year-to-date was up 20.2% compared to the same period a year ago, primarily due to improved profitability and lower working capital needs.

Customer Retention and New Business

Notable improvements in customer retention compared to the same quarter a year ago, and more new business was installed than a year ago by a solid margin.

Specialty Garment and First Aid Segments Growth

Revenues from the specialty garment segment increased by 2.2% due to strong European nuclear operations. The first aid segment's revenues increased by 10.6%, driven by strong growth in van operations.

Strategic Investments and Expansion

Expansion of the distribution center in Owensboro, Kentucky, to improve speed and efficiency for direct sales of uniforms. Continued investments in growth and operational execution.

Lowlights

Net Wearer Levels Decline

Net wearer levels for existing customers declined in the quarter, showing some incremental weakness compared to the same quarter last year.

Higher Health Care Costs

Higher health care costs partially offset improvements in operating income and adjusted EBITDA.

Challenges in Specialty Garment Segment

Operating margin for the specialty garment segment decreased to 16.7% from 22.8% in the prior year.

Company Guidance

During the UniFirst Second Quarter 2025 Earnings Conference Call, the company provided guidance reflecting a positive trajectory in several financial metrics. UniFirst reported consolidated revenues of $602.2 million, marking a 1.9% increase from fiscal 2024, with organic growth at 2.3%. Operating income rose significantly by 11.7%, reaching $31.2 million, while adjusted EBITDA improved by 6.3% to $68.9 million, compared to the same quarter last year. The company also noted a 20.2% increase in operating cash flow year-to-date. For the full fiscal year 2025, UniFirst anticipates revenues between $2.422 billion and $2.432 billion, and diluted earnings per share (EPS) ranging from $7.30 to $7.70. This outlook reflects ongoing improvements in core laundry operations and an updated assumption of $12 million in key initiative costs, slightly revised down from prior estimates.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.