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Vestis Corporation (VSTS)
NYSE:VSTS
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Vestis Corporation (VSTS) AI Stock Analysis

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VSTS

Vestis Corporation

(NYSE:VSTS)

Rating:47Neutral
Price Target:
$5.00
▲(6.61% Upside)
Vestis Corporation's overall stock score is primarily impacted by its weak financial performance and bearish technical indicators. The company's high leverage and declining profitability are significant concerns. While strategic initiatives are underway, immediate improvements are not expected, and the stock's valuation metrics are unattractive.
Positive Factors
Management Changes
The new management team has begun to identify some of the critical issues impacting growth and profitability, along with some early ideas on how to address these issues.
Operational Strategy
New CEO Jim Barber emphasized the importance of unlocking operational leverage throughout the business by focusing on profitable growth and reinvesting back into frontline teams and service centers.
Negative Factors
Financial Performance
Shares ended the day down 37% following a hard reset in expectations for the business.
Operational Issues
The company continues to struggle with customer service and sales despite various efforts to improve these areas operationally.
Revenue Performance
Revenue decreased 5.7%, to $665 million, below the consensus estimate of $690 million.

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

Vestis Corporation Business Overview & Revenue Model

Company DescriptionVestis Corporation (VSTS) operates within the technology sector, focusing on delivering innovative solutions in the field of data analytics and enterprise software. The company specializes in providing tools and platforms that enhance business intelligence, operational efficiency, and data-driven decision-making for various industries. Through its core offerings, Vestis empowers organizations to leverage their data assets for improved performance and strategic insights.
How the Company Makes MoneyVestis Corporation generates revenue primarily through a subscription-based model for its software solutions, offering tiered pricing plans that cater to businesses of different sizes and needs. Key revenue streams include licensing fees for its analytics platforms, customized software development services, and consulting fees for implementation and training. Additionally, Vestis partners with technology firms and industry leaders to expand its market reach and enhance its product offerings, which contribute significantly to its earnings. The company also explores opportunities in the form of strategic alliances and joint ventures that can lead to new revenue channels.

Vestis Corporation Earnings Call Summary

Earnings Call Date:Aug 05, 2025
(Q3-2025)
|
% Change Since: -21.70%|
Next Earnings Date:Nov 26, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook. While there were significant efforts and initiatives in place to improve operational leverage and cash flow, the company is currently facing challenges with revenue decline, churn, and decreased gross margin.
Q3-2025 Updates
Positive Updates
Improved Cash Flow
The company generated $23 million of operating cash flow and $8 million of free cash flow, reflecting a positive improvement over the last quarter.
Operational and Strategic Initiatives
Introduction of a value-based pricing model and focus on optimizing product mix and cost of service to improve operational leverage.
Significant New Business Wins
Growth from new business or conversion contributed approximately $45 million or 6.7% of revenue year-over-year for the third quarter.
Strategic Focus on Customer Experience
Investments in tools, systems, and processes to support frontline team members and improve customer retention.
Negative Updates
Revenue Decline
Revenue during the quarter was $674 million, down $24 million or 3.5% year-over-year compared to the third quarter of 2024.
Churn Impact
The revenue impact in the third quarter from churn or lost business was approximately $60 million compared with the same quarter in the prior year.
Gross Margin Decrease
Gross margin was 27%, down approximately 200 basis points compared to the third quarter of last year.
Ongoing Revenue Pressure
Continued revenue pressure as churn outpaces conversion; revenue from existing business decreased by $3 million year-over-year.
Company Guidance
During the Vestis Corporation Fiscal Third Quarter 2025 Earnings Conference Call, guidance was provided highlighting several metrics and strategic initiatives. The company reported a decline in revenue to $674 million, down 3.5% year-over-year, attributed primarily to a decrease in rental revenue and direct sales. Despite these challenges, Vestis installed 20% more recurring revenue year-over-year through field and national account sales organizations. The company also noted a churn impact of $60 million, leading to a business retention rate of 91.9% in revenue dollars. Gross margin for the quarter was 27%, down 200 basis points from the previous year. The call emphasized a strategic shift towards value-based pricing, optimizing product mix for profitability, and enhancing cost efficiency to unlock operating leverage. Additionally, Vestis aims to modernize its technology infrastructure, with a capital expenditure expectation of around $60 million for the year. The adjusted EBITDA was reported at $64 million, with an adjusted margin of 9.5%, while the liquidity position remains strong with $290 million of available liquidity and a net leverage ratio of 4.50x. The company is focused on stabilizing performance and preparing for meaningful improvement in 2026, with plans to provide further details during the next call.

Vestis Corporation Financial Statement Overview

Summary
Vestis Corporation shows a mixed financial performance. Strong cash flow generation and a stable balance sheet are positive, but profitability challenges are evident with a negative net profit margin and declining revenue growth.
Income Statement
65
Positive
Vestis Corporation shows a mixed performance in its income statement. The TTM (Trailing-Twelve-Months) gross profit margin is approximately 27.9%, indicating a solid ability to manage production costs relative to revenue. However, the net profit margin is negative at -0.89%, reflecting a recent decline in profitability. Revenue growth has been inconsistent, with a decrease in the latest period compared to the previous year. The EBIT and EBITDA margins are also under pressure, suggesting challenges in operational efficiency.
Balance Sheet
70
Positive
The balance sheet of Vestis Corporation is relatively stable. The debt-to-equity ratio is approximately 1.60, indicating a moderate level of leverage. The equity ratio stands at 30.2%, reflecting a reasonable level of equity financing. However, the return on equity has turned negative in the TTM period, which is a concern for shareholder returns. Overall, the balance sheet shows a balance between debt and equity but highlights potential risks in profitability.
Cash Flow
75
Positive
Vestis Corporation's cash flow statement indicates strong cash generation capabilities. The operating cash flow to net income ratio is robust, suggesting effective cash conversion from operations. The free cash flow to net income ratio is also strong, highlighting the company's ability to generate free cash flow despite a negative net income in the TTM period. However, there is a noticeable decline in free cash flow growth, which could impact future liquidity.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue2.71B2.81B2.83B2.69B2.46B2.56B
Gross Profit742.86M815.95M855.07M777.33M690.94M748.01M
EBITDA207.89M299.37M362.01M326.60M229.54M286.88M
Net Income-29.97M20.97M213.16M141.68M74.27M111.65M
Balance Sheet
Total Assets2.91B2.93B3.16B3.13B3.11B0.00
Cash, Cash Equivalents and Short-Term Investments23.74M31.01M36.05M23.74M41.11M0.00
Total Debt1.41B1.38B1.69B182.18M181.58M0.00
Total Liabilities2.03B2.03B2.28B797.20M776.40M0.00
Stockholders Equity882.23M903.05M877.36M2.34B2.33B0.00
Cash Flow
Free Cash Flow300.77M392.88M179.11M156.40M154.20M173.22M
Operating Cash Flow328.89M471.79M256.98M232.85M244.34M231.29M
Investing Cash Flow-28.37M-73.64M-14.75M-86.13M-103.16M-43.37M
Financing Cash Flow-305.78M-402.98M-230.27M-162.54M-125.51M-175.13M

Vestis Corporation Technical Analysis

Technical Analysis Sentiment
Negative
Last Price4.69
Price Trends
50DMA
5.76
Negative
100DMA
6.56
Negative
200DMA
10.33
Negative
Market Momentum
MACD
-0.38
Positive
RSI
36.04
Neutral
STOCH
44.84
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 4.69 is below the 20-day moving average (MA) of 5.33, below the 50-day MA of 5.76, and below the 200-day MA of 10.33, indicating a bearish trend. The MACD of -0.38 indicates Positive momentum. The RSI at 36.04 is Neutral, neither overbought nor oversold. The STOCH value of 44.84 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 35 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 0 New Risks

Vestis Corporation Peers Comparison

Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
81
Outperform
$2.99B11.8423.85%1.62%8.78%117.40%
67
Neutral
$1.37B-4.37%6.21%-177.57%
62
Neutral
$4.46B40.929.82%0.59%-2.34%-37.24%
60
Neutral
kr43.36B13.661.95%2.33%-0.60%-20.68%
52
Neutral
$4.07B142.071.41%2.22%11.41%-92.67%
50
Neutral
$246.45M-77.23%2.99%-3.46%-222.37%
47
Neutral
$623.60M122.82-3.36%2.89%-4.59%-125.50%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
VSTS
Vestis Corporation
4.69
-9.02
-65.79%
WSC
WillScot Mobile Mini Holdings
23.40
-15.34
-39.60%
HRI
Herc Holdings
118.54
-26.07
-18.03%
MGRC
Mcgrath Rentcorp
124.02
16.74
15.60%
CTOS
Custom Truck One Source
5.68
1.18
26.22%
ALTG
Alta Equipment Group
7.28
0.73
11.15%

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.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Aug 19, 2025