The 10-second takeaway
For the quarter ended Dec. 29 (Q2), G&K Services beat slightly on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue expanded and GAAP earnings per share grew significantly.
Margins grew across the board.
G&K Services recorded revenue of $229.2 million. The seven analysts polled by S&P Capital IQ wanted to see revenue of $226.0 million on the same basis. GAAP reported sales were 5.6% higher than the prior-year quarter's $217.1 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.68. The seven earnings estimates compiled by S&P Capital IQ averaged $0.60 per share. GAAP EPS of $0.68 for Q2 were 33% higher than the prior-year quarter's $0.51 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 31.4%, 170 basis points better than the prior-year quarter. Operating margin was 10.0%, 220 basis points better than the prior-year quarter. Net margin was 5.8%, 140 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $228.0 million. On the bottom line, the average EPS estimate is $0.58.
Next year's average estimate for revenue is $908.7 million. The average EPS estimate is $2.43.
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 37 members out of 40 rating the stock outperform, and three members rating it underperform. Among 12 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 12 give G&K Services a green thumbs-up, and give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on G&K Services is outperform, with an average price target of $38.50.
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