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UniFirst Has Acquired Arrow Uniform for $122 Million

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Price movement

UniFirst (UNF) rose 1.4% to close at $132.59 per share during the third week of September 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 1.4%, 4.6%, and 27.4%, respectively, as of September 23, 2016.

UNF is trading 2.0% above its 20-day moving average, 7.4% above its 50-day moving average, and 18.4% above its 200-day moving average.

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Related ETFs and peers

The iShares Russell 2000 ETF (IWM) invests 0.10% of its holdings in UniFirst. The ETF tracks a market-cap-weighted index of US small-cap stocks. The index selects stocks ranked 1,001–3,000 by market cap. The YTD price movement of IWM was 11.8% on September 23, 2016.

The iShares Russell 2000 Value ETF (IWN) invests 0.21% of its holdings in UniFirst. The ETF tracks an index of US small-cap value stocks. The index selects value stocks from a universe of stocks ranked 1,001–3,000 by market cap.

The market caps of UniFirst’s competitors are as follows:

Latest news on UniFirst

In a press release on September 19, 2016, UniFirst reported, “UniFirst Corporation (NYSE:UNF) announced today that it has completed its acquisition of Arrow Uniform for approximately $122 million. The all-cash transaction is structured as an asset acquisition, with UniFirst acquiring substantially all of Arrow’s assets and virtually none of its liabilities.”

It added, “UniFirst expects the Arrow acquisition to add approximately $62 to $65 million to its revenues for fiscal year 2017. UniFirst also expects the deal to be dilutive to earnings in FY 2017, partially the result of non-cash purchase accounting charges.”

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Performance of UniFirst in fiscal 3Q16

UniFirst reported fiscal 3Q16 revenues of $367.8 million, a rise of 0.60% compared to $365.6 million in fiscal 3Q15. Revenues from core laundry operations and first aid rose 1.1% and 4.6%, respectively, and revenue from specialty garments fell 6.9% in fiscal 3Q16 compared to fiscal 3Q15. The company’s cost of revenues as a percentage of revenues rose 0.66%, and its income from operations fell 8.6% in fiscal 3Q16 compared to the prior year’s period.

Its net income and EPS (earnings per share) fell to $30.1 million and $1.49, respectively, in fiscal 3Q16 compared to $32.5 million and $1.61, respectively, in fiscal 3Q15.

UNF’s cash and cash equivalents rose 25.7%, and its inventories fell 5.1% in fiscal 3Q16 compared to fiscal 4Q15. Its current ratio rose to 4.3x in fiscal 3Q16 compared to 3.6x in fiscal 4Q15.

Projections

The company has made the following projections for fiscal 2016:

  • revenue of $1.46 billion–$1.47 billion
  • EPS of $5.45–$5.65

Next, we’ll take a look at Dr Pepper Snapple Group (DPS).

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