Bearish stock to watch: UniFirst Corp (NYSE: UNF)

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UniFirst Corp (NYSE: UNF) stock fell over 6.26% on April 1st, 2020 (Source: Google finance) as the net income for the quarter decreased to $34.7 million from $47.6 million though the company has posted better than expected results for the second quarter of FY 20. The company’s cash, cash equivalents and short term investments were of total $395.3 million at the end of the second quarter of fiscal 2020. The company had generated the cash provided by operating activities for the first half of the fiscal year of $136.9 million, which represents an increase of $8.2 million from the comparable period in prior year. For the first half of fiscal 2020, capital expenditures were of total $62.3 million.

Moreover, the company’s Core Laundry operations revenues for the second quarter were $412.2 million, which reflects an increase of 4.5% from the second quarter of 2019. Core Laundry organic growth which adjusts for the estimated effective acquisitions as well as fluctuations in the Canadian dollar was 3.6%. During the second quarter, the organic growth continued on the back of solid new account sales and improved customer retention in fiscal 2019, as well as the improved collection of merchandise recovery charges. Core Laundry revenues were negatively affected by approximately 0.3% from the timing of revenues around the Thanksgiving holiday. The revenues from the Specialty Garments segment, rose by 21% to $36.0 million from $29.8 million in prior year. This decrease was mainly due to higher direct sale activity in the second quarter, as well as strong growth in the cleanroom and the European nuclear operations. First Aid segment’s revenues increased by 23.2% to $16.4 million from $13.3 million in prior year mainly due to a strong quarterly performance in the segment’s wholesale distribution business as well as the company’s initiative to expand its First Aid van business into new geographies.

UNF in the second quarter of FY 20 has reported the adjusted earnings per share of $1.82, while adjusted revenue growth of 6.2 percent to $464.6 million in the second quarter of FY 20. Additionally, during the second quarter of fiscal 2020, the company had repurchased 20,500 common shares for a total of $4.2 million under the previously announced stock repurchase program. As of February 29, 2020, the company had repurchased a total of 268,250 common shares for a total of $44.7 million under the program.

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