Vestis Corp.: Revenue Growth Needs To Recover First
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May Investing Ideas697 FollowersFollow5ShareSavePlay(8min)CommentsSummaryVestis Corp. remains a hold as fundamentals are weak and revenue continues to decline, justifying its discounted valuation.FY25 revenue, adjusted for the extra week, fell 3.5% y/y; gross margin contracted 366 bps, and net loss reached $40.2 million.FY26 guidance implies margin stabilization via a $75 million cost savings program, but the full benefit materializes in FY27.Persistent high churn, loss of quality accounts, and lack of top-line recovery limit any near-term re-rating potential for VSTS. Morsa Images/DigitalVision via Getty Images Investment Overview I wrote about Vestis Corp. (VSTS) previously with a hold rating, as there were no tangible signs of an immediate turnaround. I am still holding rated for VSTS, as I don’t see anyThis article was written byMay Investing Ideas697 FollowersFollowI am an individual investor that is now fully focus on managing my own capital that I have saved up over the years. My investing background spreads across a wide spectrum as I believe there are merits to each approach, for instance: Fundamental investing [Bottoms-up etc.], Technical investing [historical charts analysis], and to some extend momentum investing [share price reaction post earnings etc.]. Over the years, I have used the positive aspects of each approach to hone my investing process. The reason to write on SeekingAlpha is to use this platform as a tracker for my investing ideas performance, and also to connect with like-minded investors that have the same investing interest.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Quick InsightsWhat does VSTS's FY26 margin guidance signal for near-term earnings?FY26 guidance for $285–$315 million adj. EBITDA and ~130 bps margin expansion suggests cost savings may stabilize earnings, but not drive growth without revenue recovery.How does high churn and loss of quality accounts impact VSTS's route-based business model?High churn, especially among quality accounts, erodes route density, elevates fixed costs, and structurally compresses margins, offsetting cost-saving gains.Why does VSTS continue to trade at a discount to peers like UNF and CTAS?VSTS's ongoing revenue declines, elevated churn, and loss of high-quality customers justify its lower multiple versus peers with stronger, positive revenue growth profiles.Recommended For You