Unifirst Corporation (UNF) Pre-earnings Analysis

UNF Pre-earnings Analysis

Chart done on daily timeframe. Unifirst Corporation has positioned itself nicely to take a small chuck of a multibillion dollar industry, an industry that is consistent on both the consumer and producer’s end. This has helped it build its revenues steadily over the last seven years, but unfortunately the operational costs eat away most of the profits, leaving them with profit margins that often vary based on labor and material cost factors. This explains the decline in profits UNF has seen in the last five years as inflation ate away at its profits along with rising interest rates, and analysts seem to be understanding of that as they’ve adjusted their profit expectations lower. Quarterly EPS for UNF are estimated to come in at $1.41 this quarter, far lower than last quarter’s $2.38 report. This could be a good and a bad thing for them, because an earnings beat alone is not good enough to push the stock, they’ll need to beat and come close to their last report for buyers to take serious interest. This year’s profitability will also be in focus as investors are already nervous of their declining profits. 

Option chain analysis:

UNF is a very low volume stock, which means its options chain doesn’t have much volume either. Liquidity is very low so it will be difficult to enter and exit options at a desired limit price and movement will be very unusual. Their nearest option chain expires on April 19th, 2024 and it currently reflects an implied volatility reading of 26.60%, which translates to about a $9.56 move. The direction of the move will be based on the earning’s outcome.