Breaking Down Superior Group of Companies, Inc. (SGC) Financial Health: Key Insights for Investors

You're looking at Superior Group of Companies, Inc. (SGC) and seeing a classic tension: recent misses against a bullish long-term forecast, and you need to know which narrative to trust. The reality is SGC's third quarter 2025 results showed net sales of $138.5 million, missing consensus estimates, with net income at just $2.7 million, a sequential improvement from Q2 but still materially lower year-over-year. The company tightened its full-year 2025 revenue outlook to a range of $560 million to $570 million, acknowledging the subdued growth environment and macro uncertainty. But here's the kicker: while the current net profit margin has slipped to 1%, analysts are forecasting a massive 50% earnings growth per year for the next three years, betting on cost discipline (SG&A is flat at 35% of sales) and pipeline conversion. Still, you have to weigh that against the high dividend payout ratio of 155.56% on a 6.0% yield, which is defintely a red flag for sustainability, plus the rising risk from new tariffs and trade policy uncertainty. We'll break down whether SGC's strong liquidity-over $100 million in total-is enough to bridge the gap between today's soft demand and tomorrow's projected rebound.

Revenue Analysis

You need to know where Superior Group of Companies, Inc. (SGC) is making its money, and the direct takeaway here is that while management has tightened the full-year revenue outlook, the third quarter of 2025 showed a clear contraction. The company updated its full-year 2025 revenue guidance to a range of $560 million to $570 million, which is a slight increase at the midpoint from their previous forecast, but it still reflects a cautious environment.

The consolidated net sales for the third quarter (Q3) of 2025 came in at $138.5 million, a noticeable decline of approximately 7.5% compared to the $149.7 million reported in the year-ago period. This drop tells us that the macroeconomic headwinds are defintely impacting customer spending and order timing across the board. Still, the sequential improvement from Q2 2025 is a small positive.

Superior Group of Companies, Inc. (SGC) operates through three primary segments, and all three saw a revenue decrease in Q3 2025. Branded Products remains the largest contributor, but the entire portfolio is feeling the pressure of cautious customer behavior and elongated decision-making cycles. Here's the quick math on how the segments stacked up in the third quarter:

The largest segment, Branded Products, which focuses on promotional products and uniforms, saw an 8.1% decrease in Q3 2025 net sales. This was primarily due to the timing of orders and lower sales volume from existing clients, which is a common issue when corporate budgets get squeezed. To be fair, a $2.9 million increase from the 3Point acquisition, completed in December 2024, did partially offset this decline, showing that strategic acquisitions are helping to stabilize the top line. The pipeline is robust, but conversion is slow.

The other two segments also faced challenges. Healthcare Apparel revenue declined by 4.6%, driven by volume decreases in both wholesale and retail channels as customer uncertainty continues to affect purchasing. The Contact Centers segment saw the steepest drop, off 9.5%, reflecting the impact of client downsizing and the loss of a key solar customer. This segment is highly sensitive to the overall health of the service economy, so a drop here is a clear signal of broader economic caution. You should defintely read Exploring Superior Group of Companies, Inc. (SGC) Investor Profile: Who's Buying and Why? to understand how investors are reacting to these segment shifts.

What this estimate hides is the potential for a rapid ramp-up if market conditions normalize; the company has been proactively cutting costs and maintaining a strong balance sheet to prepare for that moment. The key is watching the sales conversion rate in the Branded Products segment over the next two quarters.

Profitability Metrics

When you look at Superior Group of Companies, Inc. (SGC), the profitability picture for 2025 is a classic tale of margin pressure meeting aggressive cost control. The direct takeaway is that while the gross margin is holding up better than the bottom line, the company is fighting hard to keep its operating efficiency in check against a tough macroeconomic backdrop.

For the third quarter of 2025, the company reported net sales of $138.5 million, but the real story is what's left over after costs. Your key profitability ratios-Gross, Operating, and Net-show a firm that's been squeezed at every level compared to the prior year, even as management has focused on expense discipline. It's a tight ship, but the water is still choppy.

Gross, Operating, and Net Margins

Let's break down the core numbers for the quarter ended September 30, 2025. This gives you the most recent, defintely relevant view. The company's gross profit margin landed at 38.3%. That's the first line of defense, showing what's left after the cost of goods sold (COGS). But the margin compression really hits as you move down the income statement.

The Operating Profit Margin-which tells you how efficient the core business is before interest and taxes-was significantly lower. Here's the quick math: Operating Profit (EBIT) was approximately $4.6 million (Pretax Earnings of $3.2 million plus $1.4 million in net interest expense). Divide that by the $138.5 million in sales, and you get an Operating Margin of roughly 3.3%. Finally, the Net Profit Margin for the quarter was just 2.0%, with net income at $2.7 million.

The full-year outlook is even more telling, with analyst consensus showing the Net Profit Margin having slipped to just 1.0% from 2.4% last year.

• Gross Margin: 38.3% (Q3 2025).
• Operating Margin: Approx. 3.3% (Q3 2025).
• Net Margin: 2.0% (Q3 2025).

Profitability Trends and Operational Efficiency

The trend in profitability is clearly pointing to a challenging period, but the company is taking action. The Gross Margin of 38.3% in Q3 2025 is down from 40.4% in the year-ago quarter. This drop is due to factors like customer sales mix and higher product costs, especially in the Branded Products and Healthcare Apparel segments. The cost of materials and shifts in what customers are buying are eating into the initial markup.

However, the operational efficiency story is a positive counter-narrative. Management has been focused on cutting selling, general, and administrative (SG&A) expenses. In Q3 2025, SG&A as a percent of sales was 35%. The company has implemented cost management strategies expected to save $13 million annually, which is a significant figure against a full-year revenue outlook of $560 million to $570 million. This focus on the operating line is what will drive the forecasted rebound in profitability over the next few years.

You can see the full picture of the company's investor base and strategy by reading Exploring Superior Group of Companies, Inc. (SGC) Investor Profile: Who's Buying and Why?

Comparison with Industry Averages

To put SGC's margins into perspective, you need to compare them against similar companies in the apparel and promotional products space. SGC's Q3 2025 Gross Margin of 38.3% is competitive with the broader Apparel Retail average of 41.9%, but it significantly lags the Apparel Manufacturing average of 49.3%. The gap is even wider when you look at the 'good' industry benchmark for apparel, which is around 50-60%.

The real difference maker is the bottom line. SGC's Q3 2025 Net Margin of 2.0% is below the Apparel Manufacturing average of 3.0% and the Apparel Retail average of 2.6%. This tells you that SGC's operating and non-operating costs (like interest expense) are taking a larger bite out of revenue than its peers, which is a key area for management to address.

Debt vs. Equity Structure

You want to know how Superior Group of Companies, Inc. (SGC) is financing its operations, and the quick answer is they lean heavily on equity, keeping debt well-managed. Their leverage is low compared to the broader apparel industry, which is a sign of financial stability in a volatile market.

As of September 30, 2025, Superior Group of Companies, Inc.'s total debt stood at approximately $100.0 million. This figure is split between the short-term and long-term obligations, indicating a manageable debt maturity profile. This conservative approach to borrowing gives them substantial headroom for strategic investments or to weather economic headwinds.

• Current portion of long-term debt (short-term): $6.094 million
• Long-term debt: $93.906 million

Here's the quick math on their leverage: The most critical figure is the debt-to-equity (D/E) ratio, which shows how much debt a company uses to finance its assets relative to the value of shareholders' equity. For Superior Group of Companies, Inc., with total shareholders' equity at $193.836 million as of Q3 2025, the D/E ratio calculates to about 0.52.

To be fair, a 0.52 D/E ratio is defintely on the low side for their sector. For context, the average D/E ratio for Apparel Manufacturing is around 0.92, and for Apparel Retail it can be as high as 1.2. A ratio below 1.0 generally suggests that a company is funding more of its assets with equity than with debt, which translates to lower financial risk for investors. Superior Group of Companies, Inc. is running a tighter ship than many of its peers.

The company's approach to debt financing is marked by stability and a focus on liquidity. Their primary financing structure includes a $125 million revolving credit facility and a term loan, both of which are set to mature in August 2027. This maturity date provides a clear runway for operations and planning. They also showed a commitment to de-leveraging in 2024, making net debt payments of $7.7 million.

Superior Group of Companies, Inc. balances debt financing with equity funding by actively returning capital to shareholders. They maintain a consistent quarterly dividend of $0.14 per share. Plus, they are executing on a share repurchase authorization, having allocated $4.0 million to buy back shares in the second quarter of 2025 alone. This signals confidence in their cash flow and a desire to enhance shareholder value through both dividends and reducing share count. Overall, they maintain a strong balance sheet with over $100 million in total liquidity, combining cash and available credit.

For more detailed analysis, you can read the full post: Breaking Down Superior Group of Companies, Inc. (SGC) Financial Health: Key Insights for Investors

Liquidity and Solvency

You need to know if Superior Group of Companies, Inc. (SGC) can cover its near-term obligations, especially in a volatile market. The quick answer is yes, their liquidity position is robust, showing significant capacity to manage short-term debt and fund operations. This is a clear strength on the balance sheet.

To be precise, as of the third quarter ending September 30, 2025, SGC's ability to meet its immediate financial obligations is excellent. The company's Current Ratio (current assets divided by current liabilities) stands at a strong 2.71, meaning they have $2.71 in current assets for every dollar of current liabilities. Even better, the Quick Ratio (or acid-test ratio), which strips out inventory, is still a very healthy 1.70. This tells you they can pay off current debts with cash, receivables, and other highly liquid assets alone. That's defintely a comfortable buffer.

Analysis of Working Capital Trends

The core of SGC's short-term financial strength lies in its substantial working capital (current assets minus current liabilities). As of September 30, 2025, the company reported working capital of approximately $184.66 million (calculated as $280.03 million in total current assets minus $95.37 million in total current liabilities). This is a significant pool of capital, but it's crucial to note its composition.

• Inventory Concentration: A large portion of current assets is tied up in inventories, totaling $105.66 million as of Q3 2025.
• Industry Norm: Since SGC is in the branded products and apparel business, carrying substantial inventory is normal. The high Quick Ratio of 1.70 suggests that even with this inventory load, their other liquid assets are more than enough to cover short-term liabilities.

Cash Flow Statements Overview

Looking at the cash flow statement gives you a real-world view of how money is moving in and out of the business, which is often more telling than just the balance sheet. Here's the quick math on the first half of 2025:

The operating cash flow of $2.95 million for the first six months of 2025 shows the core business is generating cash, though at a slower pace than the prior year. Investing cash flow is negative, which is fine-they are spending $2.72 million on property, plant, and equipment, which is an investment in the future. The Q1 financing cash flow was positive, primarily driven by a net increase in borrowings under revolving lines of credit, which helped bolster cash reserves.

Potential Liquidity Concerns or Strengths

The biggest strength is the total liquidity. As of September 30, 2025, the combination of cash and cash equivalents ($16.65 million) plus the available capacity under their revolving credit facility gives SGC over $100 million of total liquidity. That's a strong position to execute growth plans and manage any near-term economic headwinds. Still, you should be aware of a potential pressure point: the dividend.

The high dividend payout ratio (the proportion of earnings paid out as dividends) signals a potential sustainability concern, as the company is paying a quarterly dividend of $0.14 per share. While the cash is there now, a high payout ratio means less cash is retained for internal growth or to weather a prolonged downturn. This is a capital allocation decision that warrants close monitoring. For a deeper dive into who is buying and why, you might want to read Exploring Superior Group of Companies, Inc. (SGC) Investor Profile: Who's Buying and Why?

Valuation Analysis

You're looking at Superior Group of Companies, Inc. (SGC) and trying to figure out if the recent stock dip makes it a buy or a value trap. My take is this: the stock currently presents a compelling value proposition based on traditional metrics, but you have to be a realist about the near-term earnings risk. The market is pricing in significant headwinds, pushing the stock toward its 52-week low.

As of November 2025, Superior Group of Companies' stock is trading near the low end of its 52-week range of $8.39 to $17.40, with a recent closing price around $8.89. This steep drop-the stock has decreased by 42.23% over the last 12 months-is a clear signal of investor concern over macroeconomic uncertainty and recent earnings misses. The simple truth is, the market doesn't like uncertainty.

Is Superior Group of Companies, Inc. (SGC) Overvalued or Undervalued?

When we look at the core valuation multiples, Superior Group of Companies appears undervalued compared to historical norms and the broader market, but the high dividend payout ratio signals a need for caution. The key is in the Price-to-Book (P/B) ratio, which is currently around 0.71 (TTM). This means the stock is trading below its book value, a classic sign of potential undervaluation. Still, the forward Price-to-Earnings (P/E) ratio for FY 2025 is 19.72 based on the consensus EPS of $0.77, which is a bit rich for a company facing growth challenges.

Here's the quick math on the core ratios:

• Price-to-Earnings (P/E) (FWD 2025): 19.72
• Price-to-Book (P/B) (TTM): 0.71
• Enterprise Value-to-EBITDA (EV/EBITDA) (TTM): 9.39

The Enterprise Value-to-EBITDA (EV/EBITDA) of 9.39 (TTM) is reasonable, suggesting the company's total value (equity plus debt, less cash) is less than ten times its operating cash flow proxy (EBITDA). What this estimate hides, however, is the disparity in earnings forecasts. The consensus FY 2025 EPS of $0.77 is significantly higher than some analyst estimates, like Singular Research's $0.43, which would push the P/E ratio much higher, closer to 30. That's defintely something to watch.

Dividend Sustainability and Analyst Outlook

The dividend is a major part of the investment thesis here, but it's not without risk. Superior Group of Companies pays an annual dividend of $0.56 per share, giving a forward dividend yield of approximately 6.50%. This yield is attractive, but the trailing 12-month dividend payout ratio is an unsustainable 155.56% of earnings. This means the company paid out more in dividends than it earned over the last year. The good news is that analysts project a much more sustainable payout ratio of 57.73% for next year, assuming the earnings recovery materializes.

The analyst community still sees upside, despite the recent performance. The consensus rating is a Moderate Buy, with an average 12-month price target of $17.33. This target implies a potential upside of nearly 100% from the current price. To be fair, this optimism is largely predicated on the company achieving its updated FY 2025 revenue outlook of $560 million to $570 million. If you want a deeper dive into the company's segments and operational risks, check out Breaking Down Superior Group of Companies, Inc. (SGC) Financial Health: Key Insights for Investors.

Here is a summary of the key valuation and dividend metrics for Superior Group of Companies (SGC) as of late 2025:

Your next step is simple: watch the Q4 2025 earnings release closely for any sign of a sustained earnings recovery that validates the $0.77 consensus EPS. If they miss, the stock has more room to fall; if they hit, the value thesis strengthens considerably.

Risk Factors

You are looking at Superior Group of Companies, Inc. (SGC) and seeing a company with a strong balance sheet but margins under pressure. The direct takeaway here is that while SGC has good liquidity and is actively cutting costs, its near-term performance is heavily tied to unpredictable geopolitical trade policies and a cautious customer base.

The company's management is defintely focused on converting a strong sales pipeline, but the external environment is creating significant headwinds that you need to factor into your valuation models.

External & Geopolitical Risks: Trade Policy Uncertainty

The most immediate and material external risk for Superior Group of Companies, Inc. stems from global trade policy volatility. The company faces significant business risks due to newly imposed tariffs and the ongoing uncertainty surrounding U.S. trade agreements. This isn't just a theoretical concern; it translates directly into higher operational costs.

For example, the potential expiration of key trade preferences, such as the African Growth and Opportunity Act (AGOA) and the Haitian Hemispheric Opportunity through Partnership Encouragement (HOPE) Act, could force a costly shift in SGC's sourcing and manufacturing strategies. If they can't offset these cost increases through supplier negotiations or customer price adjustments, their cash flow and profitability will suffer. This is an external factor that is hard to model, so you need to watch the legislative calendar.

• Monitor trade policy changes for AGOA/HOPE expiration.
• Factor in rising sourcing costs to gross margin forecasts.

Operational and Financial Pressure Points

Internally, the biggest challenge is margin compression driven by a combination of market demand and competitive pressures. The CEO highlighted persistent demand headwinds, noting a 'significant level of uncertainty and caution' among customers across all business segments. This caution is showing up in the numbers.

The consolidated gross margin for Q3 2025 was 38.3%, a notable drop from 40.4% in the year-ago quarter. The Branded Products segment, the largest, saw its Q3 2025 revenue fall to $85 million, down from $93 million in the prior year, driven by customer order size reductions and delayed ordering. This segment's gross margin rate decreased by 140 basis points year-over-year due to an unfavorable customer sales mix. Also, the net profit margin has slipped to 1% from 2.4% last year, which is a clear sign of the pressure on the bottom line. You also need to consider customer concentration risk, as reliance on a few large client accounts could amplify the impact of any single client loss.

Mitigation Strategies and Clear Actions

The good news is that management is not sitting still; they are executing a clear plan to mitigate these risks. The company's financial health is strong, with cash and cash equivalents at $17 million and total liquidity of over $100 million as of September 30, 2025, plus a healthy current ratio of 2.94. This liquidity gives them a buffer to navigate the uncertainty.

Operationally, SGC is focused on aggressive cost management. They have realized approximately $4 million in Selling, General, and Administrative (SG&A) savings and are targeting a total of $13 million in annualized budget savings. This expense discipline is critical to stabilizing margins while waiting for demand to normalize. They are also leveraging their diverse sourcing channels and focusing intently on converting a robust sales pipeline, which should help revenue growth in the coming quarters. You can see how this aligns with the company's long-term objectives by reviewing their Mission Statement, Vision, & Core Values of Superior Group of Companies, Inc. (SGC).

Growth Opportunities

You need to know where Superior Group of Companies, Inc. (SGC) is finding its next dollar of revenue, and the story for 2025 is a mix of strategic acquisitions and disciplined organic growth, despite macroeconomic headwinds. The company has tightened its full-year 2025 revenue outlook to a range of $560 million to $570 million, signaling confidence in its pipeline conversion and cost structure. That's a slight bump in the midpoint from earlier guidance, which is defintely a positive sign.

The core of SGC's growth strategy rests on three pillars-Branded Products, Healthcare Apparel, and Contact Centers-each with its own clear path to expansion. Honestly, the near-term focus is on converting the already robust sales pipelines and leveraging recent cost reductions to drive profitability, especially as the broader market remains cautious.

Strategic Initiatives and Near-Term Acquisitions

SGC is actively using strategic acquisitions to immediately boost its largest segment. For example, the December 2024 acquisition of Cormark Inc., operating as 3Point Brand Management, was a concrete move to strengthen the Branded Products segment. This single deal, acquired for $6.4 million, contributed $2.9 million in revenue during the third quarter of 2025 alone, showing the immediate impact of their M&A strategy. Plus, management has been explicit about their continued focus on a combination of organic growth and strategic acquisitions to enhance shareholder value.

In the Branded Products segment, the focus is on driving synergies, which means cross-selling promotional products and branding solutions to both new and existing customers. For the Contact Centers segment, the initiative is to capitalize on the growing nearshore outsourcing market, aiming to provide high-quality customer support at a reduced cost structure. It's a smart play to capture cost-conscious enterprise clients.

Future Revenue and Earnings Outlook (FY 2025)

While the company's own full-year 2025 revenue guidance is set between $560 million and $570 million, analysts are projecting a total revenue of approximately $570.87 million for the fiscal year, representing a modest year-over-year change of about +0.92%. The earnings picture is tighter due to market uncertainty and margin pressure, but the consensus is for earnings per diluted share (EPS) of around $0.41.

Here's the quick math on the revenue guidance, based on the third-quarter update:

What this estimate hides is the sequential improvement in earnings, with Q3 net income of $2.7 million up from $1.6 million in Q2 2025, suggesting the cost reductions are starting to fully phase in.

Key Growth Drivers and Competitive Edge

Superior Group of Companies, Inc. (SGC) has clear growth drivers across its diversified business model. The key is that they operate in large, fragmented markets, which leaves plenty of room for market share gains. You can see their long-term commitment in their Mission Statement, Vision, & Core Values of Superior Group of Companies, Inc. (SGC).

The main segment drivers are:

• Branded Products: Expanding the sales force and investing in software automation to make customer interactions more efficient, which is designed to drive new account acquisition and wallet share expansion.
• Healthcare Apparel: Growing the direct-to-consumer channel and increasing the retail footprint of signature brands like Wink and Carheart licensed brands, positioning them to capitalize on secular growth once demand normalizes.
• Contact Centers: Converting the strong pipeline of new business by leveraging the nearshore outsourcing model to offer cost-effective customer support.

Their competitive advantage is not a 'cutting-edge solution,' but a disciplined, comprehensive approach: a commitment to service, quality, advanced technology, and omnichannel commerce. They have a strong balance sheet and have been actively managing their capital, including a stock repurchase plan, which gives them the financial flexibility to continue investing for future growth and pursuing acquisitions.