We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Cintas (CTAS) Beats Q2 Earnings on Higher Revenues, View Up
Read MoreHide Full Article
Cintas Corporation (CTAS - Free Report) recorded strong second-quarter fiscal 2018 (ended Nov 30, 2017) results backed by healthy top-line growth. Net income from continuing operations for the reported quarter improved to $137.7 million or $1.24 per share from $121.9 million or $1.12 per share in the year-earlier quarter. Adjusted earnings were $1.31 per share, which comfortably surpassed the Zacks Consensus Estimate of $1.26.
Quarterly revenues increased 26.4% year over year to $1,606.4 million, exceeding the Zacks Consensus Estimate of $1,588 million. Organic growth for the reported quarter improved 7.7% year over year. This solid top-line performance was primarily attributable to the accretive acquisition of G&K Services Inc.
Moreover, addition of new customers, strong customer retention and higher penetration of existing customers through better and innovative products and services led to incremental organic growth.
Cintas Corporation Price, Consensus and EPS Surprise
Operating income was $235.2 million, up 17.3% year over year. Operating margin was 14.6% for the quarter compared with 15.8% in the year-earlier quarter owing to transaction expenses related to the acquisition of G&K Services.
Segmental Performance
Uniform Rental and Facility Services revenues for the second-quarter improved 30.8% year over year to $1,308 million and accounted for 81.4% of the total revenues. The segment recorded year-over-year organic growth of 7.3%. However, gross margin decreased marginally to 44.7% from 44.9% in the year-ago quarter.
At the Other segment, revenues were up 10.1% year over year to $298.4 million and accounted for 18.6% of the total revenues. This segment includes the First Aid and Safety Services, and All Other businesses that comprise the Fire Protection Services and Direct Sale business. The First Aid and Safety Services recorded organic growth of 10.8% while gross margin improved to 46.9% from 46.1% in the prior-year quarter driven by ZEE acquisition synergies. All Other businesses recorded organic growth of 7.8% while gross margin increased to 42.1% from 40.4% in the year-ago quarter.
Financial Position
Cintas has a solid financial position with adequate liquidity. At the quarter end, cash and cash equivalents were $236 million while long-term debt was $2,534.2 million.
In the first six months of fiscal 2018, net cash from operating activities was $379 million compared with $301.7 million in the prior-year period. Free cash flow in the same period increased to $246.5 million from $146.5 million in the year-ago period.
During the reported quarter, the company announced a 21.8% year-over-year increase in its annual dividend to $1.62 per share. Cintas has been continuously increasing its dividend since its inception in 1983. The current dividend hike represents the 34th consecutive year of annual dividend increase by the company.
Guidance Raised
With superior quarterly performance, Cintas increased its earlier guidance for fiscal 2018. Revenues are currently expected in the range of $6,365 million to $6,430 million, up from $6,325 million to $6,400 million, anticipated earlier. Earnings from continuing operations are expected to be between $5.39 and $5.46 per share, up from earlier projections of $5.30-$5.38.
Moving Forward
Cintas continues to deliver organic growth through superior execution of its operational plans. We remain encouraged by the company’s strong quarterly performance.
CRA International has beaten earnings estimates twice in the trailing four quarters for a positive surprise of 0.5%.
NV5 Global has a long-term earnings growth expectation of 20%. It has beaten earnings estimates thrice in the trailing four quarters for a positive surprise of 4.5%.
Accenture has a long-term earnings growth expectation of 10.3%. It has beaten earnings estimates in all the trailing four quarters for a positive surprise of 2.6%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Cintas (CTAS) Beats Q2 Earnings on Higher Revenues, View Up
Cintas Corporation (CTAS - Free Report) recorded strong second-quarter fiscal 2018 (ended Nov 30, 2017) results backed by healthy top-line growth. Net income from continuing operations for the reported quarter improved to $137.7 million or $1.24 per share from $121.9 million or $1.12 per share in the year-earlier quarter. Adjusted earnings were $1.31 per share, which comfortably surpassed the Zacks Consensus Estimate of $1.26.
Quarterly revenues increased 26.4% year over year to $1,606.4 million, exceeding the Zacks Consensus Estimate of $1,588 million. Organic growth for the reported quarter improved 7.7% year over year. This solid top-line performance was primarily attributable to the accretive acquisition of G&K Services Inc.
Moreover, addition of new customers, strong customer retention and higher penetration of existing customers through better and innovative products and services led to incremental organic growth.
Cintas Corporation Price, Consensus and EPS Surprise
Cintas Corporation Price, Consensus and EPS Surprise | Cintas Corporation Quote
Operating income was $235.2 million, up 17.3% year over year. Operating margin was 14.6% for the quarter compared with 15.8% in the year-earlier quarter owing to transaction expenses related to the acquisition of G&K Services.
Segmental Performance
Uniform Rental and Facility Services revenues for the second-quarter improved 30.8% year over year to $1,308 million and accounted for 81.4% of the total revenues. The segment recorded year-over-year organic growth of 7.3%. However, gross margin decreased marginally to 44.7% from 44.9% in the year-ago quarter.
At the Other segment, revenues were up 10.1% year over year to $298.4 million and accounted for 18.6% of the total revenues. This segment includes the First Aid and Safety Services, and All Other businesses that comprise the Fire Protection Services and Direct Sale business. The First Aid and Safety Services recorded organic growth of 10.8% while gross margin improved to 46.9% from 46.1% in the prior-year quarter driven by ZEE acquisition synergies. All Other businesses recorded organic growth of 7.8% while gross margin increased to 42.1% from 40.4% in the year-ago quarter.
Financial Position
Cintas has a solid financial position with adequate liquidity. At the quarter end, cash and cash equivalents were $236 million while long-term debt was $2,534.2 million.
In the first six months of fiscal 2018, net cash from operating activities was $379 million compared with $301.7 million in the prior-year period. Free cash flow in the same period increased to $246.5 million from $146.5 million in the year-ago period.
During the reported quarter, the company announced a 21.8% year-over-year increase in its annual dividend to $1.62 per share. Cintas has been continuously increasing its dividend since its inception in 1983. The current dividend hike represents the 34th consecutive year of annual dividend increase by the company.
Guidance Raised
With superior quarterly performance, Cintas increased its earlier guidance for fiscal 2018. Revenues are currently expected in the range of $6,365 million to $6,430 million, up from $6,325 million to $6,400 million, anticipated earlier. Earnings from continuing operations are expected to be between $5.39 and $5.46 per share, up from earlier projections of $5.30-$5.38.
Moving Forward
Cintas continues to deliver organic growth through superior execution of its operational plans. We remain encouraged by the company’s strong quarterly performance.
Zacks Rank & Key Picks
Cintas carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the industry are CRA International, Inc. (CRAI - Free Report) , NV5 Global, Inc. (NVEE - Free Report) and Accenture plc (ACN - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CRA International has beaten earnings estimates twice in the trailing four quarters for a positive surprise of 0.5%.
NV5 Global has a long-term earnings growth expectation of 20%. It has beaten earnings estimates thrice in the trailing four quarters for a positive surprise of 4.5%.
Accenture has a long-term earnings growth expectation of 10.3%. It has beaten earnings estimates in all the trailing four quarters for a positive surprise of 2.6%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>