Vestis Corporation (NYSE:VSTS) shares climbed sharply in pre-market trading on Tuesday after the uniform and workplace supplies company raised its fiscal 2026 free cash flow outlook, despite third-quarter earnings and revenue falling short of analyst expectations.
Adjusted earnings per share came in at $0.18 for the quarter ended July 3, 2026, well below the consensus estimate of $0.50. Revenue declined 1.8% year on year to $661.7 million from $673.8 million and missed the $834.2 million analyst forecast.
Despite those misses, Vestis shares advanced 8.07% before the opening bell as investors responded to the improved cash flow outlook and stronger profitability metrics.
Vestis raises free cash flow forecast
The main positive catalyst was Vestis’ decision to increase its fiscal 2026 free cash flow guidance to between $160 million and $170 million.
That compares with its previous forecast of $120 million to $150 million and represents a $30 million improvement at the midpoint.
Vestis generated $64.9 million of operating cash flow during the third quarter and repaid $30 million of debt. The company ended the period with $351.8 million of available liquidity.
The stronger cash generation provides Vestis with greater flexibility as management continues its strategic transformation and works to strengthen the company’s financial position.
Profitability improves despite lower revenue
Adjusted EBITDA increased to $80.9 million from $64.0 million in the prior-year quarter, while adjusted EBITDA margin expanded to 12.2% from 9.5%.
“During the fiscal third quarter, we continued to deliver against our commitments for the year, advancing our strategic transformation through disciplined operational and commercial execution,” said Jim Barber, President and CEO. “For the first time as a public company, Revenue Per Pound increased while Cost Per Pound remained flat on a year-over-year basis.”
The improvement in EBITDA and margins suggests Vestis is making progress on operating efficiency even as overall revenue remains under pressure.
Fiscal 2026 revenue guidance remains unchanged
Vestis maintained its fiscal 2026 revenue forecast for performance ranging from flat to a decline of 2% compared with normalized fiscal 2025 revenue.
The company also narrowed its adjusted EBITDA guidance to between $310 million and $315 million. The new midpoint of $312.5 million represents a $2.5 million increase.
For investors, the market reaction suggests the upgraded cash flow outlook and improving margins carried more weight than the headline earnings and revenue misses. Attention now shifts to whether Vestis can sustain its efficiency gains, maintain stronger cash conversion and stabilize revenue as its transformation progresses.
Vestis stock price
