In a report published Monday, Barrington Research analyst Kevin Steinke reiterated an Outperform rating on G&K Services GK, and raised the price target from $53.00 to $59.00.
In the report, Barrington Research noted, “Fourth quarter fiscal 2013 revenue increased 2.3% YOY to $229.5 million, with 3.8% growth in Rental Operations (92% of revenue) partially offset by an expected decline of 12.6% in Direct Sales. Fiscal 2013 revenue was $907.7 million (+4.3% YOY), within the guidance range of $905-915 million. The change in employment at existing customers (adds/quits) was neutral to growth during the quarter. Fourth quarter operating margin expanded 110 bps YOY to 9.8%, better than our estimate of 9.4%. Fiscal 2013 operating margin was 9.5%, up 170 bps YOY. Operating margin has increased from a low of 4.7% in Q4/09 since G&K implemented its operational improvement game plan. Adjusted EPS increased 12% YOY to $0.66, ahead of our estimate of $0.63 and the consensus of $0.65. Annualized return on invested capital (ROIC) reached 9.2%, up 130 bps YOY.”
G&K Services closed on Friday at $53.29.
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