Why UniFirst Corporation (UNF) Is a High-Conviction Buy for 2026

In 2026, the investment landscape is marked by a stark divergence between speculative AI-driven ventures and companies prioritizing operational discipline. While the AI sector continues to attract headlines with its promise of disruptive innovation, UniFirst Corporation (UNF) offers a compelling alternative: a proven model of operational transformation and margin expansion that delivers consistent, long-term value. For investors seeking stability amid market volatility, UNF's strategic reinvestment in its core business-coupled with a bullish endorsement from TimesSquare Capital-positions it as a high-conviction buy.

Operational Transformation: The Foundation of Long-Term Value

UniFirst's recent investments in enterprise resource planning (ERP) and customer relationship management (CRM) systems exemplify its commitment to operational efficiency. These initiatives, though costly in the short term, are designed to streamline processes, reduce waste, and enhance customer service. For instance, the company incurred $6.8 million in fiscal 2025 costs related to these projects, which reduced operating income and Adjusted EBITDA. However, the long-term benefits are already materializing. In Q3 2025, improved gross margins and operational effectiveness were directly attributed to these upgrades, underscoring their role in driving sustainable growth.

The Oracle ERP system, in particular, is a cornerstone of UniFirst's transformation. While the project has increased depreciation and amortization assumptions for fiscal 2026, the company anticipates these non-cash expenses will be offset by enhanced productivity and margin expansion. This strategic trade-off-accepting near-term pain for long-term gain-reflects a disciplined approach to capital allocation, a trait increasingly rare in today's hype-driven markets.

Earnings Revisions and Financial Resilience

UniFirst's financial performance in 2025 further validates its operational strategy. The company exceeded expectations in Q2 2025, with revenues rising 1.9% year-over-year to $602.2 million and adjusted EBITDA up 6.3%. These results prompted UniFirst to raise its fiscal 2025 guidance, projecting revenues of $2.422–$2.432 billion and diluted EPS of $7.30–$7.70. Such revisions signal confidence in the company's ability to navigate challenges, including the $1.4 million in Q4 2025 costs tied to its ERP/CRM projects.

Looking ahead, UniFirst's 2026 guidance-$2.475–$2.495 billion in revenue and $6.58–$6.98 in diluted EPS- reflects a balanced approach to growth. While the company acknowledges higher depreciation and amortization expenses from its Oracle ERP initiative, its net profit margin of 6.2% in 2025 demonstrates resilience. This financial discipline, combined with a low debt-to-equity ratio, positions UNF to deliver consistent returns even as it reinvests in its operations.

Contrasting UNF's Strategy with AI Sector Hype

The AI sector, by contrast, remains a high-risk, high-reward proposition. As noted in a 2026 market analysis, AI infrastructure spending has moved beyond speculative hype to become a central driver of corporate earnings growth. However, this shift has also led to heightened scrutiny of companies failing to demonstrate tangible ROI from AI investments. For investors, this creates a dilemma: bet on volatile, unproven technologies or opt for stable, incremental improvements.

UniFirst's approach aligns with the latter. While the AI sector thrives on disruptive innovation, UNF's operational reinvestment focuses on optimizing existing processes and enhancing customer retention. This strategy, though less glamorous, offers a clearer path to predictable returns. TimesSquare Capital, which increased its stake in UNF by 108,720 shares in Q3 2025, recognizes this advantage. The firm's bullish thesis hinges on UNF's ability to deliver steady margin expansion through operational efficiency, a stark contrast to the speculative nature of AI-centric plays.

Institutional Confidence and Strategic Momentum

Institutional ownership of UNF has surged, with hedge funds and institutional investors now controlling 78.17% of the company. This confidence is further bolstered by UniFirst's recent $28-million expansion of its Owensboro, KY distribution center, a move expected to enhance customer service and operational excellence. Additionally, the company's sponsorship of the NASCAR Cup Series underscores its commitment to brand visibility, a strategic lever for long-term revenue growth.

While shareholder activism-led by Engine Capital's push for a value-maximizing sale-introduces some uncertainty, UniFirst's core business remains robust. Its focus on uniform rental and facility services, which account for 91% of revenue, ensures a stable cash flow base. This stability, combined with a price-to-earnings ratio of 20.1x (well below industry averages), makes UNF an attractive valuation play.

Conclusion: A High-Conviction Buy for 2026

UniFirst Corporation's operational transformation and margin expansion strategy offer a compelling counterpoint to the AI sector's speculative allure. By prioritizing long-term efficiency over short-term hype, the company has demonstrated resilience, financial discipline, and a clear path to sustainable growth. With TimesSquare Capital's endorsement and a strong earnings trajectory, UNF is well-positioned to deliver consistent returns in 2026. For investors seeking stability in an increasingly volatile market, this is a high-conviction buy.