NEW YORK and NEW ORLEANS, Jan. 20, 2026 /PRNewswire/ -- Former Attorney General of Louisiana, Charles C. Foti, Jr., Esq., a partner at the law firm of Kahn Swick & Foti, LLC ("KSF"), announces that KSF has commenced an investigation into Vestis Corporation ("Vestis" or the "Company") (NYSE: VSTS). In May of 2025, the Company announced its financial results for 2Q 2025, disclosing that, despite prior overwhelmingly positive statements, it had withdrawn its revenue and growth guidance for the full fiscal yea ...

Core Insights - Riverwater Partners' Small Cap Strategy reported solid results for Q3 2025 but lagged behind the benchmark due to the market's preference for lower-quality companies [1] - The strategy focuses on higher-quality companies with strong fundamentals and a clear path to profitability, positioning itself well for challenging market conditions [1] - Vestis Corporation (NYSE:VSTS) was highlighted as a stock of interest, showing a one-month return of 38.46% but a significant 53.07% decline over the past 52 weeks [2] Company Analysis - Vestis Corporation is undergoing a business turnaround, which is expected to take longer than initially anticipated, compounded by a debt overhang that may hinder reinvestment [3] - The company is not among the 30 most popular stocks among hedge funds, with 27 hedge fund portfolios holding its shares at the end of Q3 2025, down from 34 in the previous quarter [4] - While Vestis Corporation has potential, the company is viewed as less favorable compared to certain AI stocks that are believed to offer greater upside potential and lower downside risk [4]

Core Viewpoint - Vestis Corp. (VSTS) continues to hold a "hold" rating due to a lack of immediate turnaround signs in its performance [1] Group 1: Company Analysis - The analyst previously assigned a "hold" rating to Vestis Corp. as there were no tangible signs of improvement [1] - The investment strategy employed by the analyst includes fundamental, technical, and momentum investing approaches, indicating a comprehensive analysis of the company's performance [1] Group 2: Investor Perspective - The individual investor focuses on managing personal capital accumulated over the years, suggesting a long-term investment approach [1] - The purpose of writing on Seeking Alpha is to track investment ideas and connect with like-minded investors, highlighting the importance of community in investment strategies [1]

Core Viewpoint - The analyst downgraded Meituan to a hold rating due to concerns over the impacts of the subsidy war, indicating that Q3 results highlighted the significant pressure faced by the company, although it suggests that the worst may be over [1]. Company Analysis - Meituan is currently experiencing challenges related to a subsidy war, which has affected its financial performance in Q3 [1]. - The downgrade to a hold rating reflects a cautious outlook on the company's ability to navigate these pressures effectively [1]. Investment Strategy - The investment approach emphasizes identifying undervalued companies with long-term growth potential, focusing on buying quality companies at a discount to their intrinsic value [1].

Core Viewpoint - Vestis (VSTS) shows a significant improvement in earnings outlook, making it an attractive investment option as analysts continue to raise earnings estimates for the company [1][2]. Earnings Estimate Revisions - The trend in estimate revisions reflects growing analyst optimism regarding Vestis's earnings prospects, which is expected to positively influence its stock price [2]. - For the current quarter, Vestis is projected to earn $0.06 per share, a decrease of 57.1% from the previous year, but the Zacks Consensus Estimate has increased by 80% over the last 30 days due to one upward revision [5]. - For the full year, the earnings estimate is $0.37 per share, indicating a year-over-year increase of 48.0%, with two estimates moving higher recently and a consensus estimate boost of 131.25% [6][7]. Zacks Rank and Performance - Vestis has achieved a Zacks Rank 2 (Buy), indicating promising estimate revisions that could lead to significant outperformance compared to the S&P 500 [8]. - Historically, Zacks 1 (Strong Buy) and 2 (Buy) stocks have shown a strong track record, with Zacks 1 stocks averaging a 25% annual return since 2008 [3][8]. Stock Performance - The stock has gained 36% over the past four weeks, driven by solid estimate revisions, suggesting potential for further growth in earnings and stock price [9].

Group 1 - The article promotes a premium service called "Value in Corporate Events" that focuses on major corporate events such as earnings reports, M&A, and IPOs, providing actionable investment ideas [1] - The service aims to cover 10 major events each month, helping investors capitalize on opportunities in the market [1] Group 2 - The article emphasizes the expertise of the leader of the investing group, who has a Master of Science in financial markets and a decade of experience in tracking companies through catalytic events [1]

Core Viewpoint - Vestis Corporation (NYSE: VSTS) has been under scrutiny due to its stock performance and financial updates, with Goldman Sachs maintaining a "Neutral" rating and adjusting its price target to $6.30, slightly above the current stock price of $6.23 [1]. Financial Performance - The Q4 2025 earnings call featured CEO James Barber and CFO Kelly Janzen, with participation from firms like William Blair & Company and JPMorgan Chase & Co, providing insights into the company's financial health and future plans [2]. - Despite a stock price decrease of 7.29%, or $0.49, on the day of the earnings call, the event underscored the market's reaction to Vestis's performance and strategic decisions [2]. Stock Volatility - VSTS has experienced significant price fluctuations over the past year, with a daily trading range between $5.30 and $6.45, and a yearly high of $17.83 and a low of $3.98, indicating volatility and investor sentiment [3]. - The company has a market capitalization of approximately $821.4 million and a trading volume of 6,210,290 shares on the NYSE, highlighting its status as an actively traded stock [3].

Financial Data and Key Metrics Changes - Reported revenue for Q4 2025 was $712 million, or approximately $660 million when normalized, reflecting a decline of $24 million, or 3.5% year-over-year compared to Q4 2024 [13][14] - Adjusted EBITDA for Q4 was $65 million, representing an adjusted margin of 9.1%, down from 11.8% in the same quarter last year [16][20] - Full-year effective tax rate for 2025 was 9.2%, with an expectation of 25-30% for 2026 [15][16] Business Line Data and Key Metrics Changes - Rental revenue decreased by $18 million, while direct sales revenue fell by $5 million, contributing to the overall revenue decline [13][14] - Business retention as measured in revenue dollars was 91.8% at the end of Q4, essentially flat compared to the previous quarter [14] Market Data and Key Metrics Changes - The normalized revenue impact from churn or lost business was approximately $60 million compared to the same quarter in the prior year [14] - The company experienced a negative foreign currency impact of $1 million [13] Company Strategy and Development Direction - The company has initiated a multi-year business transformation plan focusing on commercial excellence, operational excellence, and asset and network optimization [4][7][18] - The transformation plan aims to generate run-rate operating cost savings of at least $75 million by the end of 2026 [18][19] - The company is committed to improving customer relationships and service quality while optimizing its product mix to enhance long-term margins [6][10][24] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in customer service and revenue quality, emphasizing the need for a disciplined approach to pricing and customer retention [4][5][6] - The company expects revenue for fiscal 2026 to be flat to down 2% compared to normalized fiscal 2025 revenue, with adjusted EBITDA projected between $285 million and $315 million [19][20] - Management expressed optimism about the transformation plan and its potential to unlock operating leverage and deliver consistent, profitable growth [10][25] Other Important Information - The company generated $31 million in operating cash flow and $16 million in free cash flow during the quarter, reflecting improvements in working capital efficiency [17] - Net debt at the end of the fiscal quarter was $1.34 billion, with no debt maturities until 2028 [17][18] Q&A Session Summary Question: What is the current state of company culture and the team in place for the transformation? - Management acknowledged that employee engagement levels are not at their highest due to recent challenges but emphasized the importance of a strong vision and leadership to guide the transformation [28][30] Question: How does the company plan to optimize its network and logistics? - Management stated that the focus is on optimizing plant operations first before making decisions on network consolidation, ensuring that plants operate effectively to support customer needs [37][60] Question: What are the assumptions behind the fiscal 2026 free cash flow guidance? - The guidance includes estimates for interest, cash taxes, and restructuring charges, with capital expenditures expected to be in line with the previous year [46][47] Question: How does the company plan to implement its new pricing strategy? - The new pricing strategy will align costs to serve with pricing decisions, focusing on improving service quality and leveraging existing customer relationships for growth [71][87]

Financial Data and Key Metrics Changes - Reported revenue for Q4 2025 was $712 million, normalized to approximately $660 million when excluding a $52 million benefit from an additional operating week, representing a year-over-year decline of $24 million or 3.5% [13][14] - Adjusted EBITDA for Q4 was $65 million, with an adjusted margin of 9.1%, down from 11.8% in the same quarter last year [16][20] - The effective tax rate for the full year 2025 was 9.2%, with an expected range of 25-30% for fiscal 2026 [15][16] Business Line Data and Key Metrics Changes - Rental revenue decreased by $18 million, while direct sales revenue fell by $5 million, contributing to the overall revenue decline [13][14] - Business retention measured in revenue dollars was 91.8% at the end of Q4, remaining flat compared to the previous quarter [14] Market Data and Key Metrics Changes - The normalized revenue impact from churn or lost business was approximately $60 million compared to the same quarter in the prior year [14] - The company plans to stabilize revenue by implementing strategic pricing and increasing penetration with existing customers [21][67] Company Strategy and Development Direction - The company has initiated a multi-year business transformation plan focused on commercial excellence, operational excellence, and asset and network optimization, expected to be substantially completed by the end of fiscal 2027 [10][18] - The transformation plan aims to generate run-rate operating cost savings of at least $75 million by the end of 2026 [18][19] - The company is committed to improving customer service quality and operational efficiency to drive sustainable, profitable growth [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the transformation plan, indicating that 2026 will mark the beginning of a stronger, more resilient company [25] - The company acknowledges challenges related to customer churn and aims to improve retention as a key driver of long-term revenue stability [23][66] - The near-term focus is on increasing profitability and cash flow to support stronger financial performance [22] Other Important Information - The company generated $31 million in operating cash flow and $16 million in free cash flow during the quarter, reflecting positive improvement [17] - Net debt at the end of the fiscal quarter was $1.34 billion, with no debt maturities until 2028 [17] Q&A Session Summary Question: Employee engagement levels and turnover trends - Management acknowledged that employee engagement levels are not at their highest due to recent challenges but emphasized the importance of convincing employees that a new day is coming at the company [81] Question: Pricing strategy implementation - The company plans to align pricing decisions with the cost of service to create value, moving away from the previous approach that led to customer churn [86] Question: Capacity consolidation and network optimization - Management indicated that optimizing plant operations is the priority before making decisions on consolidating delivery networks, emphasizing the importance of plant performance [38][60] Question: Free cash flow guidance and capital needs - The company expects free cash flow to be between $50 million and $60 million, with no immediate need to raise capital for planned investments [46][53]

Financial Data and Key Metrics Changes - Reported revenue for Q4 2025 was $712 million, normalized to approximately $660 million when excluding a $52 million benefit from an additional operating week, representing a decline of $24 million or 3.5% year-over-year [12][13] - Adjusted EBITDA for Q4 was $65 million, with an adjusted margin of 9.1%, down from 11.8% in the same quarter last year [16][20] - Full-year effective tax rate for 2025 was 9.2%, with an expected range of 25-30% for 2026 [15][16] Business Line Data and Key Metrics Changes - Rental revenue decreased by $18 million, while direct sales revenue fell by $5 million, contributing to the overall revenue decline [12][13] - Business retention measured in revenue dollars was 91.8% at the end of Q4, flat compared to the previous quarter [13] Market Data and Key Metrics Changes - The normalized revenue impact from churn or lost business was approximately $60 million compared to the same quarter in the prior year [12][13] - The company plans to stabilize revenue by implementing strategic pricing and increasing penetration with existing customers [20][67] Company Strategy and Development Direction - The company has initiated a multi-year business transformation plan focusing on commercial excellence, operational excellence, and asset and network optimization [4][18] - The transformation plan aims to generate run-rate operating cost savings of at least $75 million by the end of 2026 [18][19] - The company is committed to improving customer service quality and operational efficiency to drive sustainable growth [10][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the transformation plan, emphasizing that 2026 will mark the beginning of a stronger, more resilient company [22][24] - The company anticipates revenue for fiscal 2026 to be flat to down 2% compared to normalized fiscal 2025 revenue, with adjusted EBITDA expected to range from $285 million to $315 million [19][20] Other Important Information - The company generated $31 million in operating cash flow and $16 million in free cash flow during the quarter, reflecting improvements over the previous quarter [17] - Net debt at the end of the fiscal quarter was $1.34 billion, with no debt maturities until 2028 [17] Q&A Session Summary Question: Regarding the cultural transformation and team readiness - Management acknowledged the importance of culture in the transformation and expressed confidence in having the right team in place to execute the strategic transformation [26][32] Question: Financial framework for mid to long term growth - Management indicated that more details about financial performance beyond 2026 would be available as the company executes its plans in the early quarters of 2026 [33] Question: Logistics and network rationalization - Management clarified that the focus is on optimizing existing plants before making decisions about consolidating capacity in certain regions [35][36] Question: Free cash flow guidance for fiscal 2026 - Management provided details on the assumptions behind the $50-$60 million free cash flow guidance, including capital expenditures and working capital considerations [46][51] Question: Employee engagement and turnover trends - Management recognized the challenges faced by employees and emphasized the need to improve engagement levels as part of the transformation [78][81] Question: Strategic pricing initiatives - Management highlighted the differences in the new pricing strategy, focusing on aligning service quality with pricing decisions to reduce churn and improve customer retention [70][86]