Workplace uniform provider UniFirst (NYSE: UNF) beat Wall Street’s revenue expectations in Q3 CY2025, but sales fell by 4% year on year to $614.4 million. On the other hand, the company’s full-year revenue guidance of $2.49 billion at the midpoint came in 0.8% below analysts’ estimates. Its GAAP profit of $2.23 per share was 7.5% above analysts’ consensus estimates.

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Company Overview

With a fleet of trucks making weekly deliveries to over 300,000 customer locations, UniFirst (NYSE: UNF) provides, rents, cleans, and maintains workplace uniforms and protective clothing for businesses across various industries.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.

With $2.43 billion in revenue over the past 12 months, UniFirst is a mid-sized business services company, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale. On the bright side, it can still flex high growth rates because it’s working from a smaller revenue base.

As you can see below, UniFirst’s sales grew at a decent 6.2% compounded annual growth rate over the last five years. This shows its offerings generated slightly more demand than the average business services company, a useful starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. UniFirst’s recent performance shows its demand has slowed as its annualized revenue growth of 4.4% over the last two years was below its five-year trend.

This quarter, UniFirst’s revenue fell by 4% year on year to $614.4 million but beat Wall Street’s estimates by 1.1%.

Looking ahead, sell-side analysts expect revenue to grow 3% over the next 12 months, similar to its two-year rate. This projection is underwhelming and suggests its products and services will face some demand challenges.

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Operating Margin

UniFirst was profitable over the last five years but held back by its large cost base. Its average operating margin of 7.5% was weak for a business services business.

Analyzing the trend in its profitability, UniFirst’s operating margin decreased by 2.5 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. UniFirst’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

In Q3, UniFirst generated an operating margin profit margin of 8.1%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

UniFirst’s EPS grew at a weak 2.3% compounded annual growth rate over the last five years, lower than its 6.2% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

Diving into the nuances of UniFirst’s earnings can give us a better understanding of its performance. As we mentioned earlier, UniFirst’s operating margin was flat this quarter but declined by 2.5 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For UniFirst, its two-year annual EPS growth of 20.2% was higher than its five-year trend. This acceleration made it one of the faster-growing business services companies in recent history.

In Q3, UniFirst reported EPS of $2.23, down from $2.39 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 7.5%. Over the next 12 months, Wall Street expects UniFirst’s full-year EPS of $7.98 to grow 6.5%.

Key Takeaways from UniFirst’s Q3 Results

It was good to see UniFirst beat analysts’ EPS expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. On the other hand, its full-year EPS guidance missed and its full-year revenue guidance fell slightly short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 5.1% to $164.58 immediately after reporting.

UniFirst underperformed this quarter, but does that create an opportunity to invest right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.