Noble Capital sets $16 target for Superior Uniform stock, sees growth

On Thursday, Noble Capital initiated coverage on Superior Uniform Group (NASDAQ:SGC), assigning an Outperform rating and a price target of $16.00 per share. Currently trading at $9.66, InvestingPro analysis suggests the stock is undervalued, with analysts setting targets between $14 and $20 per share. The research firm’s optimism is rooted in the company’s presence in sectors anticipated to outpace the growth of the U.S. economy, its experienced management team, and its strong financials that are believed to support growth through acquisitions.

The analyst at Noble Capital highlighted several key factors contributing to the favorable rating. Superior Uniform Group’s business spans three distinct sectors: healthcare apparel, branded products, and call centers, each with its own set of positive growth prospects. The company’s segments not only exhibit above-average organic growth potential but are also profitable and present attractive opportunities for acquisitions that could further enhance revenue and cash flow growth in the long term.

Superior Uniform Group’s seasoned management team received specific praise for their past success, suggesting confidence in their ability to navigate future growth. The company maintains a healthy current ratio of 2.9x, with liquid assets exceeding short-term obligations. Additionally, the company’s balance sheet is considered robust, providing a solid foundation for strategic acquisitions aimed at fueling expansion. InvestingPro data reveals management’s commitment through aggressive share buybacks.

Moreover, Noble Capital noted Superior Uniform Group’s history of returning capital to shareholders, which adds to the stock’s appeal. The company has maintained dividend payments for 49 consecutive years, currently offering a significant 5.8% dividend yield. This aspect, combined with what the firm views as a compelling stock valuation, underpins the Outperform rating.

The price target of $16.00 reflects Noble Capital’s assessment of Superior Uniform Group’s growth trajectory and its position within the industry. The target suggests an expectation of the stock’s potential to rise from its current levels, based on the company’s strategic initiatives and favorable industry trends. Trading near its 52-week low, the stock has experienced a 41.6% decline over the past six months. For deeper insights into SGC’s valuation and growth potential, including 12 additional ProTips and comprehensive financial metrics, visit InvestingPro.

In other recent news, Superior Group of Companies reported disappointing financial results for the first quarter of 2025, with both earnings and revenue falling short of expectations. The company posted an earnings per share (EPS) of -$0.05, missing the forecasted $0.12, and revenue of $137.1 million, below the anticipated $139.85 million. The company also experienced a net loss of $800,000, a stark contrast to the $3.9 million net income in Q1 2024, and a decline in gross margin from 39.8% to 36.8%. In response to these challenges, Superior Uniform Group has implemented $13 million in annualized cost savings to stabilize margins and maintain profitability.

DA Davidson recently downgraded its price target for Superior Uniform Group from $20 to $14, although it maintained a Buy recommendation. This revision was influenced by the company’s recent financial performance, which failed to meet revenue expectations due to postponed customer orders amidst tariff uncertainties. Despite these setbacks, DA Davidson recognized the company’s strategic advantages, such as its ability to adjust pricing and its redundant manufacturing capabilities, which could help mitigate the impact of tariffs.

Superior Uniform Group has also revised its full-year revenue guidance to a range of $550 million to $575 million, down from the previous $585 million to $595 million. The company cited economic uncertainty and potential supply chain disruptions as reasons for this cautious outlook. Analysts noted that while there is concern over potential demand destruction, the company has factored this into its guidance, which might be conservative given the robust backlog and promising new customer pipeline for the second quarter of 2025.

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