Unifi, Inc. (UFI) | Investment Case

1. Company Snapshot

1.a. Company Description

Unifi, Inc., together with its subsidiaries, engages in the manufacture and sale of recycled and synthetic products in the United States, Brazil, China, and internationally.It operates in four segments: Polyester, Nylon, Brazil, and Asia.The Polyester segment offers partially oriented, textured, solution and package dyed, twisted, beamed, and draw wound yarns; and pre-consumer and post-consumer waste products, including plastic bottle flakes, polyester polymer, and staple fiber beads to other yarn manufacturers, and knitters and weavers that produce yarn and/or fabric for the apparel, hosiery, home furnishings, automotive, industrial, and other end-use markets.

The Nylon segment provides virgin or recycled textured, solution dyed, and spandex covered yarns to knitters and weavers that produce fabric primarily for the apparel, hosiery, medical markets.The Brazil segment manufactures and sells polyester-based products to knitters and weavers that produce fabric for the apparel, home furnishings, automotive, industrial, and other end-use markets.The Asia segment primarily sells polyester-based products to knitters and weavers that produce fabric for the apparel, home furnishings, automotive, industrial, and other end-use markets.

The company sells its products through sales force and independent sales agents under the REPREVE and PROFIBER brands.Unifi, Inc.was incorporated in 1969 and is headquartered in Greensboro, North Carolina.

Show Full description

1.b. Last Insights on UFI

The recent 3-month performance of Unifi, Inc. was negatively impacted by a disappointing Q2 fiscal 2025 earnings report, which featured a revenue growth of only 1% year-over-year and a sequential decline. The company's adjusted EBITDA loss and gross margin pressure also widened, partly due to sluggish and inconsistent apparel demand. Additionally, the transition of yarn production out of its Madison, North Carolina facility and the subsequent sale of the property may have contributed to the company's challenges.

1.c. Company Highlights

Last Price	3.13
Change Percentage	-4.86%
Open	3.3
Previous Close	3.29
Market Cap ( Millions)	57
Volume	212828
Year High	6.49
Year Low	2.96
M A 50	4.09
M A 200	4.66

FCF Yield	-48.54%
Dividend Yield	0.00%
ROE	-10.07%
Debt / Equity	46.95%
Net Debt / EBIDTA	2264.10%
Price To Book	0.24
Price Earnings Ratio	-2.39
Price To FCF	-2.06
Price To sales	0.1
EV / EBITDA	36.69

2. Unifi's Q1 FY2026 Earnings: Navigating Tariff-Related Headwinds

Unifi's financial performance in Q1 FY2026 was marked by a decline in consolidated net sales to $135.7 million, down 8% year-over-year, primarily driven by trade-related uncertainty and short-term demand volatility. The gross profit was lower at $3.4 million, and the gross margin was 2.5%. The actual EPS came out at -$0.56, beating estimates of -$0.6. As A.J. Eaker noted, "We are disappointed in our financial results this quarter and have taken steps to better align and optimize costs across our business."

Publication Date: Nov -21

                                    📋 Highlights
                                    Trade Tariff Impact::
                                                8-week sales decline in Asia/Central America due to pre-April tariff order cancellations, affecting $135.7M Q1 revenue (-8% YoY).
Facility Transition Costs::
                                                Madison closure and Yadkinville expansion (40% capacity boost) increased costs but are expected to improve EBITDA sequentially in 2026.
Cost Reductions::
                                                $5M quarterly COGS savings and SG&A drop to <$45M by 2026, alongside headcount reductions.
Beyond Apparel Growth::
                                                $20M revenue target by 2026 from military, carpet, and packaging initiatives, driven by polyester resin and recycled materials.
Inventory & Apparel Recovery::
                                                Apparel sales rose +5% YoY, with inventory down 15% and expected order normalization in January 2026.

                                

Revenue Growth Prospects

Despite the current challenges, Unifi expects to see revenue growth through its Beyond Apparel initiatives, including military, carpet, resin sales, and packaging. Edmund Ingle mentioned that the company expects to see $20 million in revenue from these initiatives by the end of calendar 2026. Analysts estimate next year's revenue growth at 2.2%. The company's efforts to commercialize value-added technologies and expand into new markets are expected to drive revenue growth.

Cost Savings and Margin Expansion

Unifi has implemented a cost restructuring initiative, which is expected to result in significant savings on an annual basis. The company has reduced its headcount, matched machine run rates with sales volumes, and strategically reduced operating costs across its business. A.J. Eaker stated that the company expects a strong decline in SG&A, from approximately $49 million in fiscal 2025 to under $45 million in fiscal 2026. The company also expects to see $5 million per quarter in cost savings from a COGS perspective.

Valuation Metrics

Unifi's current valuation metrics indicate that the market is pricing in significant challenges. The stock trades at a P/E Ratio of -2.4, P/B Ratio of 0.24, and EV/EBITDA of 36.77. The Net Debt / EBITDA ratio is 22.64, indicating a high level of debt relative to EBITDA. The Free Cash Flow Yield is -48.23%, suggesting that the company is not generating sufficient free cash flow.

Outlook

Unifi expects adjusted EBITDA to improve sequentially from Q1 FY2026, primarily driven by cost savings in the Americas segment. The company anticipates that the global trade situation will gain greater clarity by the end of calendar 2025, and significantly reduced inventory levels in the channel after the holiday season should help see incremental improvement of the top line throughout calendar 2026.

3. NewsRoom

Unifi, Inc. (UFI) Q1 2026 Earnings Call Transcript

Nov -06

Source: seekingalpha.com

Unifi (UFI) Reports Q1 Loss, Beats Revenue Estimates

Nov -05

Source: zacks.com

Unifi, Inc. (UFI) Q4 2025 Earnings Conference Call Transcript

Aug -21

Source: seekingalpha.com

Unifi (UFI) Reports Q4 Loss, Lags Revenue Estimates

Aug -20

Source: zacks.com

UNIFI®, Makers of REPREVE®, Announces Fourth Quarter and Fiscal 2025 Results

Aug -20

Source: businesswire.com

UNIFI®, Makers of REPREVE®, Launches A.M.Y.® Peppermint Built-in Odor Control and Expands Circular Offerings of REPREVE Takeback™ and ThermaLoop™ Insulation

Aug -19

Source: businesswire.com

UNIFI®, Makers of REPREVE®, Schedules Fourth Quarter Fiscal 2025 Earnings Conference Call

Aug -13

Source: businesswire.com

UNIFI®, Makers of REPREVE®, Announces the Sale of Manufacturing Facility

May -21

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.59%)

6. Segments

Americas

Expected Growth: 6.5%

Unifi's 6.5% growth in Americas driven by increasing demand for sustainable and recycled textiles, expansion in e-commerce and outdoor recreation markets, and strategic partnerships with major brands. Additionally, growing awareness of environmental issues and government regulations supporting eco-friendly practices contribute to the segment's growth.

Brazil

Expected Growth: 6.0%

Brazil's 6.0% growth is driven by increasing demand for sustainable textiles, government incentives for eco-friendly production, and rising consumer awareness of environmental issues. Additionally, Unifi's strong distribution network and partnerships with local manufacturers have enabled the company to capitalize on the country's growing textile industry.

Asia

Expected Growth: 7.5%

Unifi's 7.5% growth in Asia is driven by increasing demand for sustainable textiles, government initiatives promoting eco-friendly manufacturing, and rising middle-class consumption in countries like China and Indonesia. Additionally, Unifi's strategic partnerships with local suppliers and investments in recycling technologies have enhanced its competitive advantage in the region.

7. Detailed Products

UniFi Access Points

Wireless access points designed for high-performance and reliability, offering a range of models for different environments and use cases.

UniFi Switches

Managed switches designed for high-density environments, offering advanced features for network management and security.

UniFi Security Gateways

Routers and security gateways designed for high-performance and security, offering advanced threat protection and network segmentation.

UniFi Cameras

IP cameras designed for surveillance and security, offering advanced features for video analytics and motion detection.

UniFi Network Management

Cloud-based network management platform designed for centralized management and monitoring of UniFi devices.

8. Unifi, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Unifi, Inc. has a low threat of substitutes due to its unique Wi-Fi technology and strong brand recognition, making it difficult for substitutes to enter the market.

Bargaining Power Of Customers

Unifi, Inc. has a medium bargaining power of customers due to the presence of some large customers, but the company's strong brand and product offerings mitigate this power.

Bargaining Power Of Suppliers

Unifi, Inc. has a low bargaining power of suppliers due to its strong relationships with suppliers and its ability to negotiate favorable terms.

Threat Of New Entrants

Unifi, Inc. has a high threat of new entrants due to the growing demand for Wi-Fi technology and the relatively low barriers to entry in the industry.

Intensity Of Rivalry

Unifi, Inc. operates in a moderately competitive industry, with several established players, but the company's strong brand and product offerings help it to maintain a competitive edge.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	31.46%
Debt Cost	5.00%
Equity Weight	68.54%
Equity Cost	7.65%
WACC	6.82%
Leverage	45.91%

11. Quality Control: Unifi, Inc. passed 3 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Vince

A-Score: 4.3/10

Value: 9.6

Growth: 2.7

Quality: 4.0

Yield: 0.0

Momentum: 9.5

Volatility: 0.0

1-Year Total Return ->

FIGS

A-Score: 4.1/10

Value: 1.7

Growth: 8.8

Quality: 5.8

Yield: 0.0

Momentum: 5.0

Volatility: 3.0

1-Year Total Return ->

Delta Apparel

A-Score: 3.4/10

Value: 10.0

Growth: 1.7

Quality: 2.9

Yield: 0.0

Momentum: 5.0

Volatility: 0.7

1-Year Total Return ->

Ubiquiti

A-Score: 3.0/10

Value: 8.3

Growth: 1.3

Quality: 3.2

Yield: 0.0

Momentum: 0.5

Volatility: 4.7

1-Year Total Return ->

Hanesbrands

A-Score: 3.0/10

Value: 3.5

Growth: 0.9

Quality: 4.5

Yield: 2.0

Momentum: 4.0

Volatility: 3.0

1-Year Total Return ->

Xcel Brands

A-Score: 2.7/10

Value: 9.2

Growth: 2.4

Quality: 4.1

Yield: 0.0

Momentum: 0.0

Volatility: 0.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

15.17%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.82%

Unifi, Inc. - US9046772003

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on UFI

1.c. Company Highlights

Lower Growth

Cheaper

Weak Momentum

Earnings Miss

Revenues Miss

Stable Momentum

Earnings Beats

Lower Quality

Average Growth

Average Yield

Fairly Valued

Average Quality

2. Unifi's Q1 FY2026 Earnings: Navigating Tariff-Related Headwinds

Revenue Growth Prospects

Cost Savings and Margin Expansion

Valuation Metrics

Outlook

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.59%)

6. Segments

Americas

Expected Growth: 6.5%

Brazil

Expected Growth: 6.0%

Asia

Expected Growth: 7.5%

7. Detailed Products

UniFi Access Points

UniFi Switches

UniFi Security Gateways

UniFi Cameras

UniFi Network Management

8. Unifi, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Unifi, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

3.13$

Current Price

3.13$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA