Zacks Initiates Coverage of Regis With Neutral Recommendation

Zacks Investment Research has recently initiated coverage of Regis Corporation RGS, assigning a "Neutral" recommendation to the company's shares. This assessment comes amid a mixed outlook for the company, which has been making notable strides in the beauty salons space despite industry challenges.

Regis, based in Minneapolis, MN, franchises, owns and operates beauty salons offering haircutting, styling and hair coloring services, along with professional hair care products. It operates under the trade names Supercuts, SmartStyle, Cost Cutters, First Choice Haircutters, Roosters and Magicuts.

Regis’ earnings profile in second-quarter fiscal 2026 has shown tangible improvement in recent quarters despite continued traffic headwinds across the system. While top-line momentum remains modest, the company has expanded operating income and improved EBITDA through pricing actions, tighter cost controls and a greater contribution from company-owned salons. The shift toward positive operating cash flow further underscores that operational adjustments are translating into stronger internal cash generation, an important step in stabilizing RGS’ business.

The research report highlights several key factors that could drive Regis’ future growth. The December 2024 acquisition of Alline Salon Group materially expanded the company-owned salon base and proved operating-income accretive, shifting the revenue mix and giving management greater direct control over pricing and labor initiatives. Comparable sales trends have also improved, with system-wide results turning positive in the first half of fiscal 2026 and Supercuts delivering solid growth. Management’s deployment of revised stylist compensation models, pricing adjustments and labor optimization tools across the expanded corporate portfolio is aimed at driving RGS’ structural margin gains over time.

However, potential investors should consider certain risks outlined in the report. Regis maintains a relatively expensive, SOFR-based debt structure with a paid-in-kind component, and refinancing clarity may not emerge until closer to the June 2026 window. Continued franchise closures, SmartStyle underperformance, retail product weakness and signs of franchisee credit stress could pressure royalties and rent collections. Without a sustained recovery in RGS’ traffic trends, investor sentiment may remain cautious as the turnaround progresses.

Regis stock has underperformed its industry peers and the broader market over the past year. The valuation suggests that investors remain skeptical about the durability of the turnaround and RGS’ ability to refinance its debt on favorable terms. At the same time, it implies meaningful upside potential if execution improves and balance sheet risk is reduced.

For a comprehensive analysis of Regis’ financial health, strategic initiatives, and market positioning, you are encouraged to view the full Zacks research report. This in-depth report provides a detailed discussion of the company's operational strategies, financial performance, and the potential risks and opportunities that lie ahead.

Read the full Research Report on Regis here>>>

Note: Our initiation of coverage on Regis, which has a modest market capitalization of $57.4 million, aims to equip investors with the information needed to make informed decisions in this promising but inherently risky segment of the market.

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This article originally published on Zacks Investment Research (zacks.com).

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