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Here's Why You Should Hold On to Cintas (CTAS) Stock Now
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Cintas Corporation (CTAS - Free Report) is aided by strength in its first aid cabinet service business and increased volumes at the Uniform Rental and Facility Services segment despite labor shortages and high raw material costs.
Higher revenues at the Uniform Rental and Facility Services and First Aid and Safety Services segments are driving CTAS’ top line (up 13.7% year over year in the first six months of fiscal 2023). Increased volumes and higher prices are driving revenues at the Uniform Rental and Facility Services segment (revenues rose 12% year over year in the first six months of fiscal 2023).
Strength across the first aid cabinet service business is boosting the First Aid and Safety Services segment’s performance. Revenues from the segment climbed 17.2% in the first six months of fiscal 2023.
Cintas, carrying a Zacks Rank #3 (Hold), is also seeing strong growth across its uniform direct sale (33.9% organic growth in the fiscal second quarter) and fire protection services (18% organic growth in the fiscal second quarter) businesses.
Cintas’ improved fiscal 2023 outlook raises optimism in the stock. The company now expects revenues of $8.67-$8.75 billion in fiscal 2023 compared with $8.58-$8.67 billion anticipated earlier. Earnings are estimated to be in the range of $12.50-$12.80 per share compared with $12.30 to $12.65 expected earlier. For fiscal 2023, Cintas expects adjusted operating income between $1.75 billion and $1.79 billion ($1.55 billion reported in fiscal 2022).
Focus on operational execution, cost-control measures and pricing actions are helping Cintas maintain healthy margin performance. For instance, in the fiscal second quarter, the gross margin increased 100 basis points to 47%. The company’s focus on the enhancement of its product portfolio, along with investments in technology and existing facilities, should drive its performance.
Cintas’ efforts to consistently reward its shareholders through dividends and share repurchases further raise its attractiveness. In the first six months of fiscal 2023, the company repurchased shares worth $348.68 million and paid dividends of $215.01 million.
In July 2022, Cintas hiked its quarterly dividend by 21.1% to $1.15 per share. CTAS has consistently raised its dividend for 39 straight years. In addition to the dividend hike, the company’s board also approved a new share buyback program, authorizing the company to buy back up to $1 billion worth of shares. This is in addition to the existing buyback program, under which $0.5 billion worth of shares is yet to be purchased.
Owing to the abovementioned tailwinds and impressive shareholder-friendly policies, shares of CTAS have gained 13.8% in the past six months.
Image Source: Zacks Investment Research
Key Picks
Some better-ranked stocks within the broader Industrial Products sector are as follows:
MRC Global has an estimated earnings growth rate of 325.9% and 37.4% for 2022 and 2023, respectively. Shares of the company have rallied 24.8% in the past six months.
IDEX Corporation (IEX - Free Report) presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 5.7%, on average.
IDEX has an estimated earnings growth rate of 28.4% and 6.1% for 2022 and 2023, respectively. Shares of IEX have gained 21.8% in the past six months.
EnerSys (ENS - Free Report) delivered a trailing four-quarter earnings surprise of 27.1%, on average. ENS presently carries a Zacks Rank of 2.
EnerSys has an estimated earnings growth rate of 7.2% and 26.3% for fiscal 2023 and 2024, respectively. The stock increased 24.1% in the past six months.
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Here's Why You Should Hold On to Cintas (CTAS) Stock Now
Cintas Corporation (CTAS - Free Report) is aided by strength in its first aid cabinet service business and increased volumes at the Uniform Rental and Facility Services segment despite labor shortages and high raw material costs.
Higher revenues at the Uniform Rental and Facility Services and First Aid and Safety Services segments are driving CTAS’ top line (up 13.7% year over year in the first six months of fiscal 2023). Increased volumes and higher prices are driving revenues at the Uniform Rental and Facility Services segment (revenues rose 12% year over year in the first six months of fiscal 2023).
Strength across the first aid cabinet service business is boosting the First Aid and Safety Services segment’s performance. Revenues from the segment climbed 17.2% in the first six months of fiscal 2023.
Cintas, carrying a Zacks Rank #3 (Hold), is also seeing strong growth across its uniform direct sale (33.9% organic growth in the fiscal second quarter) and fire protection services (18% organic growth in the fiscal second quarter) businesses.
Cintas’ improved fiscal 2023 outlook raises optimism in the stock. The company now expects revenues of $8.67-$8.75 billion in fiscal 2023 compared with $8.58-$8.67 billion anticipated earlier. Earnings are estimated to be in the range of $12.50-$12.80 per share compared with $12.30 to $12.65 expected earlier. For fiscal 2023, Cintas expects adjusted operating income between $1.75 billion and $1.79 billion ($1.55 billion reported in fiscal 2022).
Focus on operational execution, cost-control measures and pricing actions are helping Cintas maintain healthy margin performance. For instance, in the fiscal second quarter, the gross margin increased 100 basis points to 47%. The company’s focus on the enhancement of its product portfolio, along with investments in technology and existing facilities, should drive its performance.
Cintas’ efforts to consistently reward its shareholders through dividends and share repurchases further raise its attractiveness. In the first six months of fiscal 2023, the company repurchased shares worth $348.68 million and paid dividends of $215.01 million.
In July 2022, Cintas hiked its quarterly dividend by 21.1% to $1.15 per share. CTAS has consistently raised its dividend for 39 straight years. In addition to the dividend hike, the company’s board also approved a new share buyback program, authorizing the company to buy back up to $1 billion worth of shares. This is in addition to the existing buyback program, under which $0.5 billion worth of shares is yet to be purchased.
Owing to the abovementioned tailwinds and impressive shareholder-friendly policies, shares of CTAS have gained 13.8% in the past six months.
Image Source: Zacks Investment Research
Key Picks
Some better-ranked stocks within the broader Industrial Products sector are as follows:
MRC Global Inc. (MRC - Free Report) presently sports a Zacks Rank #1 (Strong Buy). The company pulled off a trailing four-quarter earnings surprise of approximately 103%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
MRC Global has an estimated earnings growth rate of 325.9% and 37.4% for 2022 and 2023, respectively. Shares of the company have rallied 24.8% in the past six months.
IDEX Corporation (IEX - Free Report) presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 5.7%, on average.
IDEX has an estimated earnings growth rate of 28.4% and 6.1% for 2022 and 2023, respectively. Shares of IEX have gained 21.8% in the past six months.
EnerSys (ENS - Free Report) delivered a trailing four-quarter earnings surprise of 27.1%, on average. ENS presently carries a Zacks Rank of 2.
EnerSys has an estimated earnings growth rate of 7.2% and 26.3% for fiscal 2023 and 2024, respectively. The stock increased 24.1% in the past six months.