Superior Group of Companies: A Balanced Approach to Shareholder Returns and Earnings Growth

Superior Group of Companies (NASDAQ: SGC) has long positioned itself as a disciplined player in the apparel manufacturing sector, balancing aggressive shareholder returns with strategic investments in growth. In its second quarter 2025 earnings report, the company demonstrated this equilibrium, posting a 9% year-over-year revenue increase to $144 million and a 9% rise in EBITDA to $6.1 million. These results, coupled with a $0.14-per-share dividend and $4 million in share repurchases, underscore a capital allocation strategy that prioritizes both near-term value and long-term resilience.

Dividends: Stability in a Volatile Market

SGC's dividend policy has remained remarkably consistent, with a quarterly payout of $0.14 per share for the past two quarters. While this rate has not increased since 2024, it reflects a commitment to returning cash to shareholders even amid macroeconomic uncertainty. The company's trailing twelve-month dividend yield of 5.85%—a 499% jump from its four-quarter average—positions it as one of the more attractive yields in the apparel sector. For context, peers like Vince Holding Corp. and G-III Apparel Group offer no dividends, while SGC's yield trails only Jerash Holdings' 6.10%.

This stability is critical in a market where investors increasingly seek income-generating assets. SGC's ability to maintain its dividend despite a 63% year-over-year drop in Q1 2025 EBITDA (to $3.543 million) highlights its operational flexibility. The company's CEO, Michael Benstock, emphasized that the Branded Products segment's 14% revenue growth and cost discipline have insulated SGC from broader industry headwinds.

Share Buybacks: Strategic Value Creation

SGC's share repurchase program has been equally strategic. In Q1 2025, the company spent $3.8 million to repurchase 294,000 shares, completing a $10 million buyback plan and leaving $12.3 million remaining under its authorization. This aggressive use of capital suggests management views the stock as undervalued, a sentiment reinforced by the company's 56.55% debt-to-equity ratio. While this leverage ratio is higher than peers like G-III Apparel Group (0.28), SGC's strong balance sheet and $194 million in shareholders' equity provide a buffer against refinancing risks.

The effectiveness of SGC's buybacks is evident in its share price performance. reveals a 12% total return since 2023, outpacing the S&P 500's 8% gain. This outperformance, combined with the company's $17.5 million stock repurchase plan announced in Q2 2025, signals confidence in its long-term value proposition.

EBITDA Expansion: A Catalyst for Growth

SGC's EBITDA trajectory, while volatile, offers a compelling case for near-term upside. The company's Q2 2025 EBITDA of $6.1 million marks a 9% year-over-year increase, reversing a 63% decline in Q1 2025. This rebound was driven by the Branded Products segment's 14% revenue growth and improved cost management. Analysts note that SGC's EBITDA margin of 2.6% in Q1 2025, while below its 2024 average of 6.9%, is still competitive in a sector where G-III Apparel Group's EBITDA margin stands at 3.67%.

The company's full-year 2025 revenue guidance of $550–575 million, though down from its earlier $585–595 million target, reflects a realistic approach to macroeconomic uncertainty. SGC's focus on healthcare apparel and contact center services—segments with higher margins and less cyclicality—positions it to outperform peers in a downturn.

Risk and Reward: A Balanced Perspective

Critics may point to SGC's high debt-to-equity ratio and the recent EBITDA slump as red flags. However, the company's proactive deleveraging efforts—including a $400 million voluntary debt redemption in 2024—and its $12.3 million remaining buyback authorization demonstrate a disciplined approach to risk. Additionally, SGC's diversified sourcing channels and focus on cost optimization provide a buffer against supply chain disruptions.

For investors, the key question is whether SGC's capital allocation strategy can sustain its current trajectory. The company's $17.5 million buyback plan and $0.14 dividend suggest a commitment to shareholder returns, while its EBITDA expansion in Q2 2025 indicates improving operational efficiency.

Investment Thesis

Superior Group of Companies offers a compelling case for investors seeking a balance between income and growth. Its stable dividend, aggressive buybacks, and improving EBITDA margins create a flywheel effect: returning capital to shareholders while investing in higher-margin segments. While macroeconomic risks persist, SGC's strong balance sheet and strategic focus on healthcare apparel and branded products position it to navigate uncertainty.

For those willing to tolerate short-term volatility, SGC's 5.85% dividend yield and $12.3 million in remaining buyback capacity make it an attractive addition to a diversified portfolio. The company's ability to grow revenue and EBITDA in a challenging environment underscores its resilience—a trait that could drive long-term value creation.

Investment Advice: Consider a position in SGC for its dual appeal as a dividend payer and a growth story. Monitor its Q3 2025 earnings for signs of sustained EBITDA momentum and continued buyback activity.