Vestis Corp Underperforming Into Earnings: Can Recent Momentum Continue?

Vestis Corporation (NYSE: VSTS) approaches its earnings announcement today, with markets are cautiously assessing the company's prospects amidst a backdrop of recent underperformance and analyst skepticism. The past 52 weeks have been a rollercoaster for VSTS, marked by significant volatility, but could the last month be a sign of a shift in fortunes?

The stock has plummeted 57.65% since the start of the year, yet has added 27.81% over the past month leading in to the print, with 15.71% of those gains having come last week alone.

Vestis's third-quarter 2025 financial results, reported on August 5, revealed a net loss of $0.7 million, a stark contrast to the $5 million profit in the same quarter of the previous year. Revenue also declined by 3.5% year-over-year to $673.8 million, driven by a decrease in rental revenue and the loss of a major national account customer. While the company boasts a liquidity position of $290 million, including $24 million in cash and cash equivalents, the adjusted EBITDA of $64 million, down from $86.9 million in Q3 2024, raises concerns about its ability to generate sustainable earnings.

JPMorgan's downgrade of Vestis from “Neutral” to “Underweight” on July 14 further dampened market sentiment. The bank cited “poor fundamentals, organizational instability, and takeover discussions that appear to have stalled” as key reasons for its pessimistic outlook. The downgrade also highlighted concerns about Vestis's ability to rebuild profitable client volumes, describing it as a “slow grind” complicated by substantial debt.

The second quarter results were also far from stellar, reporting a net loss of $28 million and a revenue decline of 5.7% year-over-year. In response, Vestis management took decisive action to shore up the balance sheet by amending its credit agreement and eliminating its dividend.

While the prevailing narrative surrounding Vestis is largely pessimistic, the company's recent cost-cutting measures and focus on operational efficiency, while painful in the short run, could lay the foundation for a more sustainable and profitable business model.

Moreover, Vestis's strong market position in the uniform and workplace supplies industry provides a competitive advantage that should not be discounted.

The upcoming earnings announcement will be a crucial test for Vestis. Analysts will be closely watching for signs of improvement in revenue growth, profitability, and operational efficiency. Any positive surprises could provide a much-needed boost to the stock, while further disappointments could reverse the recent momentum.