Results: Vestis Corporation Exceeded Expectations And The Consensus Has Updated Its Estimates
Last week, you might have seen that Vestis Corporation (NYSE:VSTS) released its third-quarter result to the market. The early response was not positive, with shares down 2.4% to US$13.52 in the past week. Revenues were US$662m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.08, an impressive 100% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following last week's earnings report, Vestis' seven analysts are forecasting 2027 revenues to be US$2.69b, approximately in line with the last 12 months. Earnings are expected to improve, with Vestis forecast to report a statutory profit of US$0.53 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.71b and earnings per share (EPS) of US$0.37 in 2027. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the great increase in earnings per share expectations following these results.
Check out our latest analysis for Vestis
The consensus price target rose 18% to US$12.27, suggesting that higher earnings estimates flow through to the stock's valuation as well. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Vestis analyst has a price target of US$17.00 per share, while the most pessimistic values it at US$5.60. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 0.2% by the end of 2027. This indicates a significant reduction from annual growth of 0.6% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 6.2% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Vestis is expected to lag the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Vestis' earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Vestis' revenue is expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Vestis going out to 2028, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 1 warning sign for Vestis you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.