Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Cintas Corporation (CTAS - Analyst Report) reported strong fiscal fourth quarter 2013 (ended May 31, 2013) results with record revenue and healthy year-over-year increase in earnings. Net income for the reported quarter was $86.0 million or 69 cents per share compared with $78.6 million or 60 cents per share in the year-earlier quarter. While absolute earnings increased 9.4% year over year, it increased 15.0% on a per share basis due to a positive impact from the share buyback program. However, the reported earnings marginally missed the Zacks Consensus Estimate by a penny.

For fiscal 2013, net income rose 6.0% to $315.4 million from $297.6 million in fiscal 2012. On a per share basis, earnings surged 11.0% year over year to $2.52 from $2.27 in fiscal 2012. This is the third consecutive fiscal year in which Cintas recorded a double-digit increase in earnings despite a challenging macroeconomic environment.

Operational Update

Total quarterly revenue increased 7.2% year over year to $1.13 billion, slightly ahead of the Zacks Consensus Estimate of $1.12 billion. Organic growth (adjusted for the impact of acquisitions) was 6.2% with a strong execution of operational plans, which include a diligent focus on stringent cost-control measures and improvement in efficiency levels.  

For fiscal 2013, Cintas generated record revenues of $4.32 billion, which represented a 5.2% increase from the prior fiscal. Taking into account the effect of one less workday in the reported fiscal compared with fiscal 2012, total revenue improved 5.6% year over year. Organic growth for fiscal 2013 was 4.9%.

Segment Performance

Rental Uniforms and Ancillary Products revenues for the quarter improved 4.8% year over year to $785.0 million, accounting for 70% of the total company revenue. Gross margin decreased to 42.1% from 43.3% in the year-ago quarter due to the adverse effect of higher material and service costs associated with added route capacity.

Revenues for Uniform Direct Sales aggregated $124.7 million (up 12.1% year over year) and accounted for 11% of the company’s revenues. Gross margin remained relatively flat at 30.8%.

First Aid, Safety and Fire Protection Services revenues climbed 15.1% to a record quarterly tally of $125.4 million, representing 11% of the company’s total revenue. Gross margin improved 110 bps year over year to 43.5% by leveraging infrastructure facilities for an improved mix of higher-margin sale items.

Revenues for Document Management Services segment increased 11.3% year over year to a record quarterly total of $94.0 million, accounting for 8% of the total company revenue. Gross margin for the segment was 46.4%.

Financial Position

Cintas has a solid financial position with adequate liquidity. Cash and cash equivalents were $352.3 million at fiscal-end 2013 compared with $339.8 million at fiscal-end 2012. Long-term debt was $1.31 billion as of May 31, 2013 compared with $1.28 billion in the year-ago period. Cash flow from operations was $552.7 million for fiscal 2013, representing a 17.6% increase from the comparable period in the previous fiscal. Cash from operating activities in the reported quarter was $184 million, compared with $162 million in the year-ago quarter.

Fiscal 2014 Outlook

For fiscal 2014, Cintas expects revenue to be in the range of $4.5 billion-$4.6 billion with continued softness in the market due to several factors including the Affordable Care Act. Earnings are expected to be in the range of $2.66-$2.75 per share.

Moving Forward

Cintas continues to deliver organic growth through superior execution of its operational plans. The company witnessed top-line growth across all the segments in the reported quarter and expects to continue this bull run in the coming quarters as well, albeit at a moderate pace. We also remain encouraged with the relatively strong quarterly and fiscal performances of the company.

Cintas presently has a Zacks Rank #3 (Hold). Other companies in the industry worth reckoning include Macquarie Infrastructure Company LLC (MIC - Snapshot Report) and Harte-Hanks Inc. (HHS - Snapshot Report), both carrying a Zacks Rank #2 (Buy), and Heartland Payment Systems, Inc. (HPY - Snapshot Report) that carries a Zacks Rank #1 (Strong Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
GENERAL FINA GFN 8.20 +5.67%
QIHOO 360 TE QIHU 91.57 +4.38%
VIPSHOP HOLD VIPS 140.01 +3.49%
INVESTMENT T ITG 19.16 +3.34%
VERTEX ENERG VTNR 7.38 +3.07%