NEW YORK (TheStreet) -- UniFirst Corp. (UNF) shares are down 9.3% to $102.28 in trading Wednesday. The decline comes following the release of the uniform company's second quarter results and fiscal year 2014 guidance.
Must Read: Warren Buffett's 10 Favorite Growth Stocks
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
UniFirst reported second quarter adjusted earnings per share (EPS) of $1.27 and revenue of $344 million, while analysts expected an EPS of $1.39 and revenue of $347.9 million.
The company's fiscal year EPS guidance of $5.60 to $5.75 also fell short of the analysts consensus estimate of $5.91.
"Our revised outlook for the remainder of the year reflects lower expectations for our Specialty Garments and First Aid segments as well as an assumption that the recent decline in the value of the Canadian dollar and higher energy prices will continue to influence our results," said CEO Ronald Croatti.
TheStreet Ratings team rates UNIFIRST CORP as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate UNIFIRST CORP (UNF) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- UNIFIRST CORP has improved earnings per share by 11.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, UNIFIRST CORP increased its bottom line by earning $5.82 versus $4.76 in the prior year. This year, the market expects an improvement in earnings ($5.85 versus $5.82).
- The net income growth from the same quarter one year ago has significantly exceeded that of the Commercial Services & Supplies industry average, but is less than that of the S&P 500. The net income increased by 12.0% when compared to the same quarter one year prior, going from $30.76 million to $34.46 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 6.9%. Since the same quarter one year prior, revenues slightly increased by 4.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- UNF's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, UNF has a quick ratio of 1.62, which demonstrates the ability of the company to cover short-term liquidity needs.
- You can view the full analysis from the report here: UNF Ratings Report