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Vestis Corporation (VSTS)
:VSTS
US Market

Vestis Corporation (VSTS) AI Stock Analysis

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Vestis Corporation

(NYSE:VSTS)

Rating:55Neutral
Price Target:
$6.50
▲(8.70%Upside)
Vestis Corporation faces several challenges, with declining revenue and profitability, high leverage, and negative market momentum. The recent earnings call highlighted both potential improvements and ongoing difficulties. While new business growth and leadership changes are positive, the overall financial and technical outlook remains weak, resulting in a cautious stock score.
Positive Factors
Industry Expertise
Phillip Holloman, who has served as chairman of Vestis’s board since 2023, brings extensive industry experience, including a 22-year tenure at Cintas Corporation.
Leadership Changes
The company is entering a new chapter, adding several new executives with the intention of improving operational execution while remaining committed to its long-term strategic goals.
Operational Efficiency
Efficiency improvements taking hold, driving the better margins despite the deleveraging impact.
Negative Factors
Customer and Service Issues
The company continues to struggle with customer service and sales despite various efforts to improve these areas operationally.
Financial Performance
Revenue decreased 5.7%, to $665 million, below the consensus estimate of $690 million.
Macroeconomic Challenges
High financial leverage and a potential cyclical downturn with increased U.S. unemployment present significant challenges for the company.

Vestis Corporation (VSTS) vs. SPDR S&P 500 ETF (SPY)

Vestis Corporation Business Overview & Revenue Model

Company Descriptionnull
How the Company Makes Moneynull

Vestis Corporation Earnings Call Summary

Earnings Call Date:May 06, 2025
(Q2-2025)
|
% Change Since: -31.34%|
Next Earnings Date:Aug 06, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a mixed sentiment. While there were positive developments such as the appointment of a new CEO and sequential monthly revenue growth, the company faced significant challenges such as a decline in revenue and adjusted EBITDA margin, as well as issues with customer retention. The execution of the credit agreement amendment provides some financial flexibility, but the overall performance fell short of expectations.
Q2-2025 Updates
Positive Updates
New Leadership Appointment
Jim Barber, former COO of UPS, will be stepping into the role of President and CEO on June 2, 2025.
Sequential Monthly Revenue Growth
Vestis reported sequential monthly revenue growth in each month since January, including April, with the current run rate 3.4% higher than it was in January.
Successful Execution of Credit Agreement Amendment
Vestis executed an amendment to its credit agreement, providing additional financial flexibility through the end of fiscal 2026.
Strong Performance in New Business
New business contributed to 2.4% of revenue growth during the quarter, with field and national account sales teams collectively installing 35% more recurring revenue year-over-year.
Negative Updates
Revenue Decline
Second quarter revenue was $665 million, down 5.7% year-over-year and 2.7% sequentially, missing growth expectations.
Adjusted EBITDA Margin Decrease
Adjusted EBITDA margin was 9.4%, a decrease from 11.9% in the first quarter of 2025 and 12.4% in Q2 of 2024.
Challenges in Customer Retention
Revenue impact from lost business was approximately $20 million, although there was a 10% improvement compared to the previous quarter.
One-Time Bad Debt Adjustment
A $15 million one-time bad debt expense adjustment was made during the quarter, impacting SG&A.
Negative Free Cash Flow
Free cash flow was negative $7 million, reflecting lower profit and higher working capital.
Company Guidance
In the fiscal second quarter of 2025, Vestis Corporation reported revenue of $665 million, a decline of 5.7% year-over-year and 2.7% from the previous quarter. The decrease was driven by an $11 million drop in rental revenue and a $7 million decline in direct sales. Adjusted for a $150 million one-time bad debt adjustment, EBITDA was $63 million, representing a margin of 9.4%, down from 11.9% in Q1. Despite these challenges, new business contributed 2.4% to revenue growth, with customer retention at 92.4%. Operational improvements and increased sales productivity were noted, with field and national account teams installing 35% more recurring revenue year-over-year. Looking forward, Vestis has shifted to quarterly guidance, projecting Q3 revenue between $674 million and $682 million and adjusted EBITDA of at least $63 million. The company emphasizes a focus on customer service and operational improvements, alongside financial flexibility through a recent credit agreement amendment.

Vestis Corporation Financial Statement Overview

Summary
Vestis Corporation shows stable financial performance with moderate gross profit margin and low net profit margin. Revenue growth is inconsistent, but reasonable EBIT and EBITDA margins are maintained. Operational efficiency is evident, yet profitability is limited. Increased leverage poses financial risk.
Income Statement
72
Positive
Vestis Corporation shows a stable financial performance with a moderate gross profit margin and a low net profit margin in the TTM. Revenue growth has been inconsistent, but the company maintains reasonable EBIT and EBITDA margins. Overall, the income statement reflects operational efficiency but limited profitability.
Balance Sheet
65
Positive
The company's balance sheet indicates a moderate level of leverage, with a debt-to-equity ratio that has increased over time, suggesting higher financial risk. The return on equity is low due to reduced net income. However, the equity ratio remains strong, indicating a substantial portion of assets funded by equity. The balance sheet is stable but reveals potential risks from increased debt.
Cash Flow
78
Positive
Vestis Corporation has shown strong cash flow management with a healthy operating cash flow to net income ratio, indicating efficient conversion of revenue into cash. The free cash flow growth is robust, providing financial flexibility. The company efficiently covers its net income through operating and free cash flows, signaling solid cash flow health.
Breakdown
TTMSep 2024Sep 2023Sep 2022Sep 2021Sep 2020
Income StatementTotal Revenue
2.77B2.81B2.83B2.69B2.46B2.56B
Gross Profit
753.71M815.95M855.07M777.33M690.94M748.01M
EBIT
140.75M157.95M217.91M192.24M96.24M149.72M
EBITDA
278.99M299.37M362.01M326.60M229.54M286.88M
Net Income Common Stockholders
9.54M20.97M213.16M141.68M74.27M111.65M
Balance SheetCash, Cash Equivalents and Short-Term Investments
18.56M31.01M36.05M23.74M41.11M0.00
Total Assets
2.90B2.93B3.16B3.13B3.11B0.00
Total Debt
1.36B1.38B1.69B182.18M181.58M0.00
Net Debt
1.34B1.35B1.65B158.44M140.47M0.00
Total Liabilities
2.00B2.03B2.28B797.20M776.40M0.00
Stockholders Equity
899.59M903.05M877.36M2.34B2.33B0.00
Cash FlowFree Cash Flow
347.38M392.88M179.11M156.40M154.20M173.22M
Operating Cash Flow
424.06M471.79M256.98M232.85M244.34M231.29M
Investing Cash Flow
-38.83M-73.64M-14.75M-86.13M-103.16M-43.37M
Financing Cash Flow
-415.94M-402.98M-230.27M-162.54M-125.51M-175.13M

Vestis Corporation Technical Analysis

Technical Analysis Sentiment
Negative
Last Price5.98
Price Trends
50DMA
8.18
Negative
100DMA
11.06
Negative
200DMA
12.87
Negative
Market Momentum
MACD
-0.75
Negative
RSI
37.82
Neutral
STOCH
39.56
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VSTS, the sentiment is Negative. The current price of 5.98 is below the 20-day moving average (MA) of 6.89, below the 50-day MA of 8.18, and below the 200-day MA of 12.87, indicating a bearish trend. The MACD of -0.75 indicates Negative momentum. The RSI at 37.82 is Neutral, neither overbought nor oversold. The STOCH value of 39.56 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for VSTS.

Vestis Corporation Risk Analysis

Vestis Corporation disclosed 36 risk factors in its most recent earnings report. Vestis Corporation reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
1.
Risk Related to Recent U.S. Tariff Announcements Q4, 2024

Vestis Corporation Peers Comparison

Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
77
Outperform
$1.34B17.7319.45%11.94%34.08%
65
Neutral
$4.41B12.065.22%249.80%4.09%-12.16%
65
Neutral
$1.31B1,757.140.18%13.91%
60
Neutral
$1.78B-15.50%19.35%27.83%
55
Neutral
$788.06M122.82-2.73%2.34%-4.11%-115.02%
46
Neutral
$841.11M-83.81%-19.85%4.94%
PCPCT
38
Underperform
$1.86B-67.71%-180.10%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
VSTS
Vestis Corporation
6.12
-5.41
-46.92%
DXPE
DXP Enterprises
85.21
36.13
73.61%
DSGR
Distribution Solutions Group
28.29
-6.13
-17.81%
PLUG
Plug Power
0.79
-2.41
-75.31%
PCT
PureCycle Technologies
10.35
5.39
108.67%
XMTR
Xometry
35.07
19.57
126.26%

Vestis Corporation Corporate Events

Executive/Board Changes
Vestis Appoints John Laveck as Chief Accounting Officer
Neutral
May 20, 2025

On May 14, 2025, Vestis Corporation announced the appointment of John Laveck as Vice President and Chief Accounting Officer, effective June 2, 2025. Mr. Laveck, a seasoned accounting professional with experience at Smurfit Westrock, WestRock Corporation, and General Electric, will oversee the company’s accounting operations. His compensation package includes a base salary, bonus eligibility, equity awards, and standard company benefits, reflecting the company’s commitment to attracting experienced leadership.

The most recent analyst rating on (VSTS) stock is a Hold with a $13.00 price target. To see the full list of analyst forecasts on Vestis Corporation stock, see the VSTS Stock Forecast page.

Executive/Board Changes
Vestis Corporation Appoints Jim Barber as New CEO
Neutral
May 9, 2025

On May 5, 2025, Vestis Corporation announced the appointment of Jim Barber as President and CEO, effective June 2, 2025. Barber, who retired from UPS in 2020 after a 35-year career, will also join the company’s Board of Directors. His compensation package includes a base salary of $950,000, a target annual bonus of 125% of his salary, and equity awards under the company’s Long-Term Incentive Plan. The agreement outlines various terms for termination and benefits, including specific conditions related to a Change of Control.

Executive/Board Changes
Vestis Corporation’s EVP Angie Kervin Resigns
Neutral
May 8, 2025

On May 8, 2025, Angie Kervin, Executive Vice President and Chief Human Resources Officer of Vestis Corporation, announced her resignation effective May 16, 2025. Her departure was a personal decision to pursue another opportunity and not due to any disagreements with the company.

Executive/Board ChangesBusiness Operations and Strategy
Vestis Corporation Amends Agreement with Corvex Management
Neutral
May 6, 2025

On May 5, 2025, Vestis Corporation and Corvex Management LP amended their Letter Agreement to increase Corvex’s beneficial ownership limit in Vestis from 15% to 20% and economic exposure limit from 17% to 20% during the standstill period. This amendment remains effective as long as Keith A. Meister serves on Vestis’s Board of Directors, potentially impacting the company’s shareholder structure and governance dynamics.

Executive/Board ChangesPrivate Placements and FinancingBusiness Operations and StrategyFinancial Disclosures
Vestis Corporation Amends Credit Agreement for Flexibility
Neutral
May 6, 2025

On May 1, 2025, Vestis Corporation amended its Credit Agreement to increase financial flexibility by adjusting the net leverage covenant ratio and restricting dividends and share repurchases until fiscal 2027 or until certain financial conditions are met. The company reported a second-quarter 2025 revenue of $665 million, with an operating loss of $9 million and a net loss of $28 million, while also announcing a leadership transition with Jim Barber appointed as the new CEO effective June 2, 2025.

Executive/Board Changes
Vestis Corporation Appoints Phillip Holloman as Interim CEO
Neutral
Mar 19, 2025

On March 18, 2025, Vestis Corporation announced that Kim Scott, its President and CEO, has left her roles and resigned from the Board of Directors. There was no disagreement between Ms. Scott and the company regarding its operations or policies. Phillip Holloman, who has been the Chairman of the Board since September 2023, has been appointed as the interim Executive Chairman, President, and CEO. Mr. Holloman, a retired executive from Cintas Corporation, brings extensive experience to his new role and will receive a monthly cash compensation and restricted stock units. His appointment is expected to provide stability and continuity for Vestis during this transition period.

Executive/Board Changes
Vestis Corporation Announces CAO Resignation and Replacement
Neutral
Mar 4, 2025

On February 26, 2025, Bryan Johnson announced his resignation as Chief Accounting Officer of Vestis Corporation, effective March 10, 2025. His departure is not due to any disagreements with the company. Kelly Janzen, the Executive Vice President and Chief Financial Officer, will take on the additional role of principal accounting officer.

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.