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Momentum

UniFirst Corporation (UNF - Snapshot Report) reported robust fiscal first-quarter results on January 3, which included an enhanced guidance for fiscal 2013 that led all earnings estimates higher. Furthermore, shares of this uniforms supplier reached a 52-week high on the same day of the report.

Overall, this Zacks Rank #1 (Strong Buy) can boast solid top-line growth, improved operating margins and a healthy balance sheet position. It has gained a solid 41.7% since June 26, 2012.

Solid Q1, Guidance Raised

UniFirst reported fiscal first-quarter earnings per share of $1.54, beating the Zacks Consensus Estimate by 15.8% and the year-ago result by 18.5%.

Total revenue of $332.6 million increased 6.3% from last year’s $313.0 million and surpassed the Zacks Consensus Estimate of $327.0 million.

Solid revenue helped operating income surge 18.0% year over year to $50.0 million. Operating margin for the period expanded 150 basis points to 15.0%.

Bolstered by the solid results, the company raised its sales and earnings projections for fiscal 2013. The company now expects sales between $1.335 and $1.348 billion, versus the previous outlook of $1.325 billion to $1.338 billion. Earnings per share are now expected at $5.10 to $5.25, instead of $4.65 to $4.85.

Earnings Estimates Surge

The Zacks Consensus Estimate for fiscal 2013 has risen 7.9% in just the past 7 days to $5.20 per share, as all 6 estimates were revised upward. This represents year-over-year growth of 14.2%.

The Zacks Consensus Estimate for fiscal 2014 advanced 5.4% to $5.50 over the same time frame, as 6 of 7 estimates moved higher. This suggests a year-over-year increase of 5.8%.

Valuation

UniFirst currently trades at a forward P/E of 15.7x, on par with the peer group average. On a price-to-book basis, shares are trading at 1.7x, a 5.6% discount to the peer group average of 1.8x.The trailing 12-month ROE of 10.8% also remains on par with the peer group.

Nevertheless, the company’s compelling fundamentals are well supported by its long-term estimated EPS growth rate of 11.5%, compared with 10.8% growth estimated for the peer group.

Shares of UniFirst have gained a robust 41.7% since June 26, 2012. Moreover, UniFirst has continually traded above the 200-day moving average over the past year. The stock is also trading above its 50-day moving average since September 6, 2012. Additionally, the company has outperformed the S&P 500 Index since October 17, 2012. Volume averages roughly 54K daily.

UniFirst Corporation is a leading supplier of uniforms, workwear and protective clothing to businesses throughout the U.S. and Canada. The company provides a wide range of apparel from traditional uniforms, industrial wear, specialty and protective clothing to corporate casual and executive attire. The company also offers floor care and restroom services products, including a range of mats, mops, soaps, air fresheners, and paper items. UniFirst has a market cap of 1.63 billion.


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