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Cintas Corp (CTAS)
NASDAQ:CTAS
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Cintas
(NASDAQ:CTAS)78Outperform
Positive Factors
Offer Price
CTAS' offer is well above the stock price level before the offer was made public, indicating a strong monetary proposition.
Negative Factors
Family Ownership
The company's high family ownership and voting power are major hurdles to the deal's completion.
Regulatory Scrutiny
There could be more antitrust scrutiny of the deal than when CTAS purchased G&K given the potential to impact the competitive landscape with National Accounts.
Cintas (CTAS) vs. S&P 500 (SPY)
Market Cap
$83.74B
Dividend Yield0.73%
Average Volume (3M)1.58M
Price to Earnings (P/E)50.1
Beta (1Y)0.96
Revenue Growth8.12%
EPS Growth20.35%
CountryUS
Employees46,500
SectorIndustrials
Sector Strength66
IndustryCorporate Services
Share Statistics
EPS (TTM)4.14
Shares Outstanding403,543,950
10 Day Avg. Volume1,790,706
30 Day Avg. Volume1,583,773
Financial Highlights & Ratios
PEG Ratio2.46
Price to Book (P/B)N/A
Price to Sales (P/S)8.42
Price to Cash Flow (P/CF)47.40
P/FCF Ratio47.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$202.63Price Target Upside-0.94% Downside
Rating ConsensusHold
Number of Analyst Covering12
Cintas Business Overview & Revenue Model
Company DescriptionCintas Corporation (CTAS) is a leading provider of corporate identity uniform programs, facility services, first aid and safety products, fire protection services, and document management solutions. The company operates across various sectors including healthcare, hospitality, food service, and manufacturing, offering a wide range of products and services designed to enhance workplace safety and efficiency. With its headquarters in Cincinnati, Ohio, Cintas serves businesses of all sizes throughout North America.
How the Company Makes MoneyCintas makes money primarily through its comprehensive rental and sales programs. Its core revenue streams include uniform rental and facility services, which encompass laundering and delivering uniforms and providing essential facility maintenance products like mats, mops, and restroom supplies. The company also generates income from selling first aid and safety products, offering fire protection services, and providing document management solutions. Cintas benefits from long-term contracts and recurring revenue due to the essential nature of its services and products. Additionally, strategic partnerships with businesses across various industries contribute to stable revenue growth and expand its market reach.
Cintas Financial Statement Overview
Summary
Cintas is showcasing strong financial performance with substantial revenue and profit growth, supported by efficient cost management and cash generation. The company maintains a robust balance sheet with low leverage, although reduced liquidity could be a concern. Overall, Cintas is in a strong financial position, poised for continued growth in the corporate services industry.Income Statement
Cintas has demonstrated strong revenue growth, with a 12.76% increase in total revenue from 2023 to TTM (Trailing-Twelve-Months). Gross profit margin remains robust at 49.13%, indicating efficient cost management. Net profit margin is also solid at 17.23%. However, the EBITDA margin slightly decreased from 26.30% in 2023 to 24.75% in TTM, showing a small dip in operational efficiency.85
Very Positive
Balance Sheet
The company's balance sheet shows a healthy equity ratio of 49.87% in TTM, suggesting a strong financial foundation. The debt-to-equity ratio is 0.19, reflecting low leverage and reduced financial risk. Return on equity is impressive at 39.88%, showcasing efficient use of equity. However, the decrease in cash reserves from $342 million in 2023 to $122 million in TTM presents a liquidity concern.78
Positive
Cash Flow
Cintas has achieved a significant 46.45% growth in free cash flow from 2023 to TTM, indicating strong cash generation capabilities. The operating cash flow to net income ratio is favorable at 1.32, highlighting effective conversion of earnings into cash. However, a decrease in cash reserves may affect short-term liquidity management.82
Very Positive
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 9.94B | 9.60B | 8.82B | 7.85B | 7.12B | 7.09B | Gross Profit |
| 4.85B | 4.69B | 4.17B | 3.63B | 3.31B | 3.23B | EBIT |
| 2.22B | 2.07B | 1.80B | 1.59B | 1.39B | 1.16B | EBITDA |
| 2.73B | 2.52B | 2.22B | 1.99B | 1.77B | 1.54B | Net Income Common Stockholders |
| 1.71B | 1.57B | 1.35B | 1.24B | 1.11B | 876.04M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 342.01M | 342.01M | 124.15M | 90.47M | 493.64M | 145.40M | Total Assets |
| 9.17B | 9.17B | 8.55B | 8.15B | 8.24B | 7.67B | Total Debt |
| 2.67B | 2.67B | 2.67B | 2.97B | 2.72B | 2.71B | Net Debt |
| 2.33B | 2.33B | 2.54B | 2.88B | 2.22B | 2.56B | Total Liabilities |
| 4.85B | 4.85B | 4.68B | 4.84B | 4.55B | 4.43B | Stockholders Equity |
| 4.32B | 4.32B | 3.86B | 3.31B | 3.69B | 3.24B |
| Cash Flow | Free Cash Flow | ||||
| 1.86B | 1.67B | 1.27B | 1.30B | 1.22B | 1.06B | Operating Cash Flow |
| 2.26B | 2.08B | 1.60B | 1.54B | 1.36B | 1.29B | Investing Cash Flow |
| -675.44M | -608.63M | -388.67M | -402.63M | -137.22M | -285.40M | Financing Cash Flow |
| -1.54B | -1.25B | -1.17B | -1.54B | -879.87M | -955.21M |
Cintas Technical Analysis
Positive
204.56
Price Trends
197.25
Positive
205.79
Negative
196.14
Positive
Market Momentum
1.62
Positive
52.46
Neutral
59.49
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CTAS, the sentiment is Positive. The current price of 204.56 is above the 20-day moving average (MA) of 204.41, above the 50-day MA of 197.25, and above the 200-day MA of 196.14, indicating a bullish trend. The MACD of 1.62 indicates Positive momentum. The RSI at 52.46 is Neutral, neither overbought nor oversold. The STOCH value of 59.49 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CTAS.
Cintas Risk Analysis
Cintas disclosed 19 risk factors in its most recent earnings report. Cintas reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Cintas Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $83.74B | 50.07 | 39.89% | 0.73% | 8.12% | 20.35% | |
78 Outperform | $25.67B | 55.05 | 35.05% | 1.19% | 10.26% | 8.47% | |
78 Outperform | $3.84B | 27.47 | 6.85% | 0.62% | 6.74% | 31.05% | |
75 Outperform | $98.82M | 12.43 | 15.94% | ― | 8.83% | 19.04% | |
69 Neutral | $3.69B | 14.05 | 17.24% | 1.86% | 8.01% | 53.64% | |
67 Neutral | $3.33B | 41.76 | 4.57% | 1.76% | 3.25% | -66.29% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% |
* Industrials Sector Average
Performance Comparison
CTAS
Cintas
204.56
49.41
31.85%
ABM
ABM Industries
52.47
12.49
31.24%
MMS
Maximus
67.41
-15.88
-19.07%
ROL
Rollins
52.52
8.80
20.13%
TAYD
Taylor Devices
31.51
-2.72
-7.95%
UNF
UniFirst
207.01
41.88
25.36%
Cintas Earnings Call Summary
Earnings Call Date: Dec 19, 2024 | % Change Since: 0.27% | Next Earnings Date: Mar 20, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong performance with record-breaking revenue and significant increases in earnings and cash flow. Strategic investments and operational excellence continue to drive efficiencies and improvements in gross margins. However, there are some challenges, including a slight downgrade in organic growth guidance and a decline in the Uniform Direct Sale segment. Despite these challenges, the company maintains a positive outlook for the year.Highlights
Record-Breaking Revenue and Growth
Second quarter total revenue grew 7.8% to $2.56 billion, an all-time high for revenue in a quarter with an organic growth rate of 7.1%.
Significant Increase in Earnings and Cash Flow
Diluted EPS grew 21.1% to $1.09. Free cash flow for the first 6 months increased 34.9% over the prior year.
Strong Operating Income
Operating income was $591.4 million, an increase of 18.4% over the prior year, and operating income as a percent of revenue was an all-time record of 23.1%.
Improved Gross Margins
Gross margin for the second quarter grew 11.8% to 49.8%, with improvements across different segments like First Aid and Safety Services and Fire Protection Services.
Positive Impact of Strategic Investments
Technology investments and operational excellence initiatives led to improved margins and efficiencies, particularly through the SAP system and SmartTruck route optimization.
Strong Performance in Focused Verticals
Healthcare, hospitality, education, and state and local government verticals continue to perform well, contributing to overall business strength.
Lowlights
Slight Downgrade in Organic Growth Guidance
Organic growth guidance was slightly adjusted from 8.1% to 7.7% at the high end due to challenges in price increases and a slight decline in catalog spending.
Uniform Direct Sale Decline
Uniform Direct Sale was down 9.2%, highlighting challenges in this segment despite its strategic importance.
Moderation in Incremental Margins Expected
Despite strong incremental EBITDA margins of 60% in the quarter, there is an expectation of a return to more normalized levels in the second half.
Company Guidance
In the second quarter of fiscal year 2025, Cintas Corporation reported strong financial performance, highlighted by a 7.8% increase in total revenue to a record $2.56 billion and an organic growth rate of 7.1%. Gross margin rose by 11.8% to 49.8%, just shy of the all-time high set in the previous quarter. Operating income soared to an all-time high of 23.1% of revenue, marking an 18.4% increase over the prior year. Diluted EPS also saw a robust growth of 21.1%, reaching $1.09. The company's strategic initiatives, such as sourcing and supply chain improvements, route and energy optimization, and technology-enabled efficiencies, contributed significantly to these gains. Cintas also updated its annual revenue expectations to a range of $10.255 billion to $10.32 billion, with an organic growth rate forecasted between 7.0% and 7.7%, and raised its annual diluted EPS guidance to a range of $4.28 to $4.34, reflecting a growth rate of 12.9% to 14.5%. These results underscore Cintas' focus on operational excellence and strategic investments aimed at delivering long-term value.Cintas Corporate Events
Executive/Board ChangesShareholder Meetings
Cintas Shareholders Approve Plan Extension at 2024 Meeting
Neutral
Nov 1, 2024
At its 2024 Annual Meeting, Cintas Corporation’s shareholders approved the extension of their 2016 Equity and Incentive Compensation Plan to 2034 without increasing the stock issuance limit. Directors were elected, executive compensation was backed, and Ernst & Young LLP was ratified as the accounting firm for fiscal 2025. However, proposals on diversity metrics, climate risk management, and political disclosure were not approved.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.