Summary
- Vestis 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 gui…
Summary
- Vestis 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.
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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 any
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Quick Insights
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.
High churn, especially among quality accounts, erodes route density, elevates fixed costs, and structurally compresses margins, offsetting cost-saving gains.
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.