Unifirst (UNF) to Post Q4 Earnings: Is a Beat in the Cards?

Unifirst Corporation UNF is scheduled to release fourth-quarter fiscal 2020 (ended August 2020) results on Oct 21, before market open.

The company delivered better-than-expected results in three of the last four quarters and lagged estimates in one. Average earnings surprise was a positive 13.3%. Notably, in the last reported quarter, its earnings of $1.12 per share missed the Zacks Consensus Estimate of $1.17 by 4.27%.

In the past three months, shares of Unifirst have gained 8.5% compared with the industry’s growth of 24.4%.

Factors at Play

Unifirst is expected to have benefited from strength in its First Aid segment during the fiscal fourth quarter. Strong demand for its personal protective equipment, including face masks, soaps, sanitizers and other critical items, is likely to have augmented its top-line performance. Also, its Core Laundry Operations and Specialty Garments segments are likely to have benefited from the gradual reopening of several of its customers’ businesses.

In the fiscal fourth quarter, the textile and uniform service provider is also likely to have benefited from its focus on enhancing its product lines and services along with the strong customer base and investments it made in acquisitions. In the first nine months of fiscal 2020 (ended May 2020), it completed eight acquisitions by investing $41.3 million. Notably, the acquisitions include a $38.8 million buyout of Missouri-based industrial laundry business.

In addition, the gradual phase out of the company’s certain employee compensation programs (related to the pandemic), along with the normalization of certain expenses (energy and travel related), is anticipated to have helped the company to maintain a healthy margin performance.

However, the overall low demand environment, owing to outbreak-led issues, is expected to have had a bearing on the company’s top-line performance in the to-be-reported quarter.

The Zack Consensus Estimate for the company’s fiscal fourth-quarter revenues is currently pegged at $441 million, suggesting 1.1% decline from the previous quarter’s reported number. However, the consensus estimate for earnings of $1.62, suggests an improvement of 44.6% on a sequential basis.

Earnings Whispers

Our proven model suggests an earnings beat for Unifirst this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The company has an Earnings ESP of +12.07% as the Most Accurate Estimate is pegged at $1.81, higher than the Zacks Consensus Estimate of $1.62.

Unifirst Corporation Price and EPS Surprise

Unifirst Corporation Price and EPS Surprise

Unifirst Corporation price-eps-surprise | Unifirst Corporation Quote

Zacks Rank: Unifirst carries a Zacks Rank #2.

Other Key Picks

Here are some other companies that you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat this season:

AGCO Corporation AGCO has an Earnings ESP of +6.07% and it sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Avery Dennison Corporation AVY has an Earnings ESP of +0.57% and it carries a Zacks Rank #2.

Franklin Electric Co., Inc. FELE has an Earnings ESP of +2.27% and a Zacks Rank of 2 at present.

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