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Cintas Corporation (CTAS)
does more than just rental work
uniforms. Over the years, they have
evolved into many diverse segments from document management to fire
protection. Even with this variety, just
about all of their businesses are dependent on a strong consumer and
Cintas has contracts with
many large industrial and commercial companies and runs a diversified
they can not only weather more storms than their competition, but also
a gamut of services at a good price to improve retention.
are a believer in the American
consumer and economic recovery then Cintas may be a stock to
It has been building solid momentum over the
past several months and recently reported a blow-out quarter which sent
Description & Developments
Cintas provides highly specialized services to businesses of all types
North America. It is the largest company in the space and services more
900,000 businesses. Founded in 1983,
Cintas has become the go-to for everything from the design, manufacture
implementation of corporate identity uniform programs to entrance mats,
restroom supplies, promotional products, document management and even
protection, first aid and safety services.
They have over 430 facilities in the US and Canada that employ
people. The rental division is still the
company’s largest but is just a part of their overall pie.
You will find Cintas’ floor mats, first aid kits,
fire alarms and suppression systems, hand soaps and air fresheners in
large and mid-size companies across the US.
They may not be a visible to the general public, but to their
they offer invaluable service and a positive corporate culture that
For all you “green” folks out there, Cintas is making the
in the industry to a phosphate-free and EDTA-free biodegradable
the laundering of their uniforms. Washing Systems LLC is the supplier
new sustainable laundry products and is their partner in this new
CTAS is a mid-cap (5.01 billion) company that is trading at about 17
(expectations for next quarter) earnings. CTAS became a Zacks
Rank 1 strong
buy on December 23rd, 2011 after their strong results on December
services company reported a
quarterly sales increase of 1% at their last earnings report, but saw a
rise in EPS for the same period. Annual sales were up 9%
compared to (fiscal)
Q22011 with total sales of roughly 3.8 billion in FY2011.
CTAS earnings jumped
from a $1.40 to $1.69 profit from FY2010 to FY2011. CTAS is
expected to earn $2.19 in FY2012
according to the Zacks Consensus Estimate.
Cintas reported strong earnings last quarter that beat estimates by
call, Cintas noted record revenue and saw a 50% jump in EPS year over
year. They also saw margins increase
throughout several of their business. Cintas has surprised analysts to
for the past 4 quarters in a row an average of 13.66%.
are for CTAS to
generate $0.52 in income this quarter when they report on March 20th. Of the 12 analysts who
the consensus is for the company to grow earnings by 30% in the current
(FY2012) and roughly 11% in FY2013.
In terms of the magnitude of analyst estimate trends, we are
seeing all of
the consensus estimates higher than they were 90 days ago for the
next quarters as well as FY2012 and FY2013. It was interesting to note that the CEO was cautious in their
report. Once he realized that they were
able to deliver such strong results in the December report, Cintas
upped their guidance
for the entire year which pushed their stock even higher.
He was confident that even in challenging times Cintas would
be able to
deliver. If the economy is indeed
improving, results should be even better.
Market Performance &
CTAS struggled a bit in the last half of 2011 and fell almost 27% from
highs to its lows in October. Late
November was key for the stock as it broke above the 50 day moving
began to pick up steam.
the last report, the stock was
propelled above both moving averages and has continued to rise in the
couple weeks. CTAS is now firmly above
its 50 and 200 day moving averages of $35.73 and $31.92
The recent consolidation has developed some
support at the $37.00 level as well.
Below that look at $34.45 as a major level aside from the moving
has exceeded the S&P 500’s
performance by 31% in the past year and over 18% in the past 3
Given its recent consolidation in the past
couple weeks, Cintas is lagging the index by about 2%. The
good news is that consolidation is when a stock will generally build a
foundation. The stock is also relatively
cheap which will benefit it if the market takes another leg
If consumer strength continues to improve,
look for CTAS stock to follow suit.
A Levy is the
Momentum Stock Strategist for Zacks.com. He is also the Editor in
charge of the
Whisper Trader Service.