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Cintas Share Price Rises 24.1% YTD: What's Driving the Rally?

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Cintas Corporation’s (CTAS - Free Report) price performance has been impressive since the beginning of this year, which is evident from a 24.1% increase in its share price. Solid product offerings, buyouts and strong customer service supported positive market sentiments for the company.

The Cincinnati, OH-based company, with $34.6 billion of market capitalization, belongs to the Zacks Uniform and Related industry. The company currently carries a Zacks Rank #2 (Buy).

Year to date, Cintas has outperformed its industry’s growth of 21.3% and the S&P 500’s rally of 9%.

 

 

Factors Favoring the Stock

The company solidified its product portfolio and leveraged business opportunities through the addition of assets. In this regard, the acquisition of G&K Services (in March 2017) is worth mentioning. The buyout helped in strengthening the company’s customer profile, product portfolio, processing capacity and customer service. Notably, the company invested $53.7 million in acquisitions in fiscal 2020 (ended May 31, 2020).

Also, the company has been benefiting from investment in technology and its focus on the enhancement of the product portfolio and customer base. For first-quarter fiscal 2021 (ending August 2020), it anticipates revenues of $1,675-$1,700 million for the quarter, while earnings are expected to be $2.00-$2.20 per share. Notably, the projections for revenues and earnings suggest improvements on a sequential basis.

Moreover, the company’s cash position remains impressive, as evident from a 20.9% year-over-year increase in cash flow from operating activities in fiscal 2020. A healthy cash flow profile allows it to continue rewarding its shareholders through dividends and share repurchases. Notably, in fiscal 2020, Cintas repurchased common stock worth $464.5 million and paid out dividends worth $268 million. It is worth mentioning that the annual dividend rate was hiked by 24.4% to $2.55 in October 2019.

Further, analysts have become increasingly bullish about the company over the past couple of months. Its earnings estimates for fiscal 2021 (ending May 2021) and fiscal 2022 (ending May 2022) have been increased by 16.5% and 5.4%, respectively.

Other Stocks to Consider

Some other top-ranked stocks from the Zacks Industrial Products sector are Helios Technologies, Inc. (HLIO - Free Report) , CECO Environmental Corp. (CECE - Free Report) and Casella Waste Systems, Inc. (CWST - Free Report) . While Helios Technologies currently sports a Zacks Rank #1 (Strong Buy), CECO and Casella carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Helios Technologies delivered an earnings surprise of 46.04%, on average, in the trailing four quarters.

CECO delivered an earnings surprise of 49.13%, on average, in the trailing four quarters.

Casella delivered an earnings surprise of 158.08%, on average, in the trailing four quarters.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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