The uniform industry was hit hard by the pandemic last year because of the stringent regulations that lead to the closure of manufacturing plants, retail shops, supply chains, and various sectors that demand work wear. In fact, many uniform manufacturers switched to producing medical scrubs, PPE kits, and warm-up jackets for healthcare employees, which, in turn, kept their businesses running.

But now, as more than 50% of adults are fully vaccinated in the United States, offices and factories are reopening and employees are returning to work. This is leading to rising demand for uniforms.

As more employees return to physical workspace, the demand for work wear is expected to soar. Moreover, the rising interest of consumers for customized clothing is driving the uniform market further. Against this backdrop, uniform stocks like Cintas Corporation (CTAS) and UniFirst Corporation (UNF), with strong financials, are expected to soar in the coming months.

Cintas Corporation (CTAS)

Founded in 1968, CTAS helps businesses of all types and sizes by providing products and services that help keep their customers’ facilities and employees clean, safe, and looking their best. It deals in products such as uniforms, mats, mops, restroom supplies, first aid and safety products, fire extinguishers and testing, and safety training.

In the fiscal third quarter that ended February 28, 2021, CTAS reported revenue of $1.78 billion. The company’s operating income increased 3.8% from the year-ago value to $326.5 million, while its net income from continuing operations came in at $258.4 million, representing a 10.2% increase year-over-year. It reported an EPS of $2.37 for this period, representing an increase of 9.7% from the year-ago value.

Analysts expect CTAS’ revenue for the current quarter that ended May 2021 to be $1.82 billion, representing 10.8% year-over-year growth. The company’s EPS is likely to increase 68.1% year-over-year to $2.27 in the current quarter. CTAS’ stock has gained 38.1% over the past year.

It is no surprise that CTAS has an overall grade of B, which translates into a Buy rating in our POWR Ratings system. It has a grade of A for Quality, and a grade of B for Sentiment and Stability. In the B-rated Outsourcing – Business Services industry, it is ranked #18 out of 51 stocks.

In total, we rate CTAS on eight different levels. Beyond what we’ve stated above, we have also given CTAS grades for Momentum, Growth and Value. Get all the CTAS ratings here.

UniFirst Corporation (UNF)

UNF is a North American leader in the supply and servicing of uniform and workwear programs, as well as the delivery of facility service programs. It also provides first aid and safety products, and manages specialized garment programs for the cleanroom and nuclear industries. The company operates in 260 service locations and 14,000 employee Team Partners.

This month, UNF revealed the revolutionary Bulwark iQ Series of safety apparel offering flame resistant (FR) and high visibility Personal Protective Equipment (PPE). This should expand its offering of FR protective workwear to help drive sales growth.

In the fiscal second quarter that ended February 27, 2021, UNF’s total operating expenses decreased 2.7% year-over-year to $409.07 million, while its cash and cash equivalents increased 28.9% from the year-ago value to $509.56 million. It reported a net income of $32.59 million for this period. Moreover, the company’s EPS came in at $1.71.

Analysts expect UNF’s revenue for the quarter that ended May 2021 to be $454.37 million, representing a 19% year-over-year growth. The company’s EPS is likely to increase 63.4% year-over-year to $1.83 in the current quarter. Over the past year, the stock has gained 19.5%.

UNF’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall grade of B, which equates to Buy rating in our POWR Ratings system. It has a grade of A for Stability, and a grade of B for Quality. In the same industry as CTAS, it is ranked #17.

Click here to see additional POWR Ratings for UNF (Momentum, Growth and Sentiment).

CTAS shares were trading at $351.44 per share on Thursday morning, down $0.84 (-0.24%). Year-to-date, CTAS has declined -0.14%, versus a 12.57% rise in the benchmark S&P 500 index during the same period.

About the Author: Samiksha Agarwal

Samiksha Agarwal has always had a keen interest in financial markets. This has led her to a career as a financial journalist. Through her extensive knowledge of fundamental analysis, her goal is to help investors identify untapped investment opportunities in the stock market. More...

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