UniFirst Corp (NYSE:UNF) stock has surged over 12% since it released its Q3 earnings report on Wednesday. Should investors consider buying the Massachusetts-based company that sells and rents uniforms and protective clothing now?
Earnings Beat
UniFirst’s Q3 earnings beat analyst estimates by a whopping 44.71%. UniFirst reported EPS of $2.46, compared to our Zacks Consensus Estimate of $1.70. The company also provided upbeat guidance for the rest of the fiscal year, calling for EPS between $8.75 and $8.85. Our current estimates call for fiscal 2019 EPS of $7.96, significantly below the company’s new expectations.
UniFirst has reported fiscal 2019 revenue of $1.33 billion through the first three quarters, compared to $1.26 billion through the same period last year. Meanwhile, the company’s Q3 revenue climbed 6% from Q3 2018 to $453.7 million.
Dividend Announcement
On Thursday, the company declared a dividend of $0.1125 per share for common stock and $0.09 per share for class B common stock. That dividend is consistent with the amount it has paid out over the past five quarters. It also, at the time of writing, represents a dividend yield of 0.23%. Although the dividend yield is rather low, UniFirst raised its dividend 175% to its current level last year.
Outlook
UniFirst was added to the list of Zacks Rank #1 (Strong Buy) stocks on Friday. Along with its Zacks Rank #1 standing, the company boasts an overall “A” VGM (Value, Growth, and Momentum) grade in our Style Score system. Our Zacks Consensus Estimates call for fiscal 2019 revenue and earnings to grow 6.56% and 6.85%, respectively. Looking further ahead, fiscal 2020 is expected to bring an additional 1.59% revenue growth on top of its fiscal 2019 number, but earnings are expected to shrink 2.94% from the fiscal 2019 expectations. UNF stock is currently trading at a P/E of 24.9 compared to its industry average of 27.27. This suggests that the stock is possibly undervalued at its current price.
YTD, UniFirst stock is up 31.7%, more than double the 15.4% increase seen by the S&P 500. Additionally, UniFirst has beat earnings expectations three out of the last four quarters, with an average surprise of 19.53%. If the company were to beat estimates for its Q4 fiscal 2019 by that significant of a margin it would likely give the stock a large boost and add on to its already impressive YTD growth.
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Unifirst Corporation (UNF): Free Stock Analysis Report
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