Research on SGC (SGC) from Sidoti & Company
For 3Q:26, we expect sales grew 3% from 3Q:25 to $148 million but that EPS fell $0.01 to $0.17, due to increased material costs and a higher tax rate. The company is benefiting from slowly improving customer sentiment and rebounding demand from its branded products, healthcare apparel, and contact center customers, in our opinion For 2026, we expect sales to advance 3% to $585 million and EPS to jump 9% to $0.50 (including a $2.6 million ($0.13 per share) non-cash charge related to a trade name impairment) on improved pricing and operating efficiency For 2027 and 2028, we expect mid-single-digit revenue growth will again outpace increases in operating expenses, supporting our estimates for EPS of $0.89 and $1.16, respectively. At the end of June, SGC had $23 million in cash and $82 million in total debt. We estimate free cash flow of $15 million ($1.01 per share) in 2026, $22 million ($1.45 per share) in 2027, and $23 million ($1.52 per share) in 2028. We think SGC could use the funds for acquisitions, which could lead to upside to our estimates and fund a $0.56 per share dividend. We maintain our moderate risk rating and $20 price target, based on 17x our 2028 EPS estimate of $1.16.
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