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Cintas Corporation (CTAS - Free Report) posted mixed third-quarter fiscal 2019 (ended February 2019) results, with earnings beating the Zacks Consensus Estimate and revenues missing the same.
Earnings/Revenues
Quarterly adjusted earnings came in at $1.84 per share, up 34.3% year over year. Also, the bottom line surpassed the Zacks Consensus Estimate of $1.71.
Revenues in the quarter under review increased 5.9% year over year to $1,682.3 million. The metric also improved 6% year over year organically. However, the top-line figure missed the Zacks Consensus Estimate of $1,693 million.
Segmental Break-Up
The Uniform Rental and Facility Services segment generated revenues worth $1,358.3 million in the fiscal third quarter, up 5.7% year over year. The top line in the First Aid and Safety Services segment improved 8.7% year over year to $149.2 million. Aggregate revenues from Other businesses came in at $174.8 million, up 4.5% year over year.
Cintas Corporation Price, Consensus and EPS Surprise
Aggregate cost of sales in the fiscal third quarter was $927.2 million, up 4.3% year over year. Gross profit margin improved 80 basis points (bps) year over year to 44.9% in the fiscal third quarter.
Selling and administrative expenses were down 3% year over year to $476.1 million in the reported quarter. Integration expenses related to G&K Services, Inc. (acquired in March 2017) surged 91.9% year over year to $0.8 million. Operating margin in the reported quarter was 16.5%, up 390 bps year over year.
Balance Sheet/Cash Flow
Cintas exited the quarter with cash and cash equivalents of $80.9 million, down from $138.7 million of May 31, 2018. Long-term debt amounted to almost $2,537 million compared with $2,535.3 million at the end of fiscal 2018.
In first nine months of fiscal 2019, the company generated $670.7 million cash from operating activities, up 1.5% year over year. Capital expenditures were $207.8 million, up 6% year over year.
In first nine months of fiscal 2019, Cintas repurchased common stock worth $546.6 million, under its buyback program. Notably, the company’s latest dividend payout of $2.05 per share was 26.5% higher than the previous year’s dividend.
Outlook
Cintas updated revenue guidance for fiscal 2019 (ending May 2019) in the range of $6.87-$6.885 billion from the previous guidance of $6.87-$6.91 billion. Notably, adjusted earnings view for the fiscal has been raised from $7.30-$7.38 per share to $7.42-$7.48.
DXP Enterprises surpassed estimates thrice in the trailing four quarters, the average being 46.55%.
Roper exceeded estimates in each of the trailing four quarters, the average being 4.96%.
Tetra Tech surpassed estimates in each of the trailing four quarters, the average being 7.34%.
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Cintas (CTAS) Beats Q3 Earnings, Lags Revenue Estimates
Cintas Corporation (CTAS - Free Report) posted mixed third-quarter fiscal 2019 (ended February 2019) results, with earnings beating the Zacks Consensus Estimate and revenues missing the same.
Earnings/Revenues
Quarterly adjusted earnings came in at $1.84 per share, up 34.3% year over year. Also, the bottom line surpassed the Zacks Consensus Estimate of $1.71.
Revenues in the quarter under review increased 5.9% year over year to $1,682.3 million. The metric also improved 6% year over year organically. However, the top-line figure missed the Zacks Consensus Estimate of $1,693 million.
Segmental Break-Up
The Uniform Rental and Facility Services segment generated revenues worth $1,358.3 million in the fiscal third quarter, up 5.7% year over year. The top line in the First Aid and Safety Services segment improved 8.7% year over year to $149.2 million. Aggregate revenues from Other businesses came in at $174.8 million, up 4.5% year over year.
Cintas Corporation Price, Consensus and EPS Surprise
Cintas Corporation Price, Consensus and EPS Surprise | Cintas Corporation Quote
Costs/Margins
Aggregate cost of sales in the fiscal third quarter was $927.2 million, up 4.3% year over year. Gross profit margin improved 80 basis points (bps) year over year to 44.9% in the fiscal third quarter.
Selling and administrative expenses were down 3% year over year to $476.1 million in the reported quarter. Integration expenses related to G&K Services, Inc. (acquired in March 2017) surged 91.9% year over year to $0.8 million. Operating margin in the reported quarter was 16.5%, up 390 bps year over year.
Balance Sheet/Cash Flow
Cintas exited the quarter with cash and cash equivalents of $80.9 million, down from $138.7 million of May 31, 2018. Long-term debt amounted to almost $2,537 million compared with $2,535.3 million at the end of fiscal 2018.
In first nine months of fiscal 2019, the company generated $670.7 million cash from operating activities, up 1.5% year over year. Capital expenditures were $207.8 million, up 6% year over year.
In first nine months of fiscal 2019, Cintas repurchased common stock worth $546.6 million, under its buyback program. Notably, the company’s latest dividend payout of $2.05 per share was 26.5% higher than the previous year’s dividend.
Outlook
Cintas updated revenue guidance for fiscal 2019 (ending May 2019) in the range of $6.87-$6.885 billion from the previous guidance of $6.87-$6.91 billion. Notably, adjusted earnings view for the fiscal has been raised from $7.30-$7.38 per share to $7.42-$7.48.
Zacks Rank & Key Picks
Cintas currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same space are DXP Enterprises, Inc (DXPE - Free Report) , Roper Technologies, Inc (ROP - Free Report) and Tetra Tech, Inc (TTEK - Free Report) . While DXP Enterprises sports a Zacks Rank #1 (Strong Buy), Roper and Tetra Tech carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
DXP Enterprises surpassed estimates thrice in the trailing four quarters, the average being 46.55%.
Roper exceeded estimates in each of the trailing four quarters, the average being 4.96%.
Tetra Tech surpassed estimates in each of the trailing four quarters, the average being 7.34%.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
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