What Happened?
Shares of workplace uniform provider UniFirst (NYSE: UNF) fell 6.3% in the morning session after the company's better-than-expected third-quarter results were overshadowed by a disappointing full-year financial outlook.
For the third quarter, UniFirst reported revenue of $614.4 million and earnings per share (EPS) of $2.23, both beating Wall Street's estimates. Despite the beat, revenue still fell 4% year on year. The main cause for concern among investors was the company's forward guidance. UniFirst's full-year revenue forecast of $2.49 billion at the midpoint fell short of expectations, and its EPS guidance of $6.78 at the midpoint missed consensus estimates by a significant 20.9%. The market's sharp, negative reaction indicated that investors weighed the weak forecast more heavily than the quarterly outperformance.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy UniFirst? Access our full analysis report here.
What Is The Market Telling Us
UniFirst’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 7 months ago when the stock dropped 13.7% on the news that Cintas terminated talks to acquire the company (UNF) in a deal that would have been worth $275 per share in cash. The offer price represented a premium of 46% over the stock's average trading price before the news of the offer was made public.
UniFirst is down 4.9% since the beginning of the year, and at $162 per share, it is trading 29.7% below its 52-week high of $230.50 from January 2025. Investors who bought $1,000 worth of UniFirst’s shares 5 years ago would now be looking at an investment worth $933.88.
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