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Cintas (CTAS) Up 4.3% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Cintas (CTAS - Free Report) . Shares have added about 4.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Cintas due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Cintas Q1 Earnings & Revenues Top Estimates, Increase Y/Y
Cintas reported first-quarter fiscal 2024 (ended Aug 31, 2023) earnings of $3.70 per share, which beat the Zacks Consensus Estimate of $3.65. The bottom line increased 9.1% year over year despite high costs.
Total revenues of $2,342.3 million outperformed the Zacks Consensus Estimate of $2,324.8 million. The top line climbed 8.1% year over year due to higher segmental revenues. Organic sales were also up 8.1% year over year.
Segmental Results
The company has two reportable segments - Uniform Rental and Facility Services and First Aid and Safety Services. Other businesses like Uniform Direct Sale and Fire Protection Services are included in All Other. Quarterly sales data is briefly discussed below.
Revenues from the Uniform Rental and Facility Services segment (representing 78% of the reported quarter’s net sales) totaled $1,826.83 million, up 7.6% year over year. Our estimate for segmental revenues was $1,814.3 million.
Revenues from the First Aid and Safety Services segment (representing 11.1% of the reported quarter’s net sales) totaled $260.69 million, up 11.3% year over year. Our estimate for segmental revenues was $247 million.
Revenues from All Other business (representing 11.4% of the reported quarter’s net sales) totaled $254.81 million, up 8.6% year over year. Our estimate for segmental revenues was $251 million.
Margin Profile
In the quarter under review, Cintas’ cost of sales (comprising costs related to uniform rental and facility services and others) increased 5.4% year over year to $1.20 billion. It represented approximately 51.3% of net sales. Gross profit increased 11% to $1.14 billion. The gross margin was 48.7% in the reported quarter compared with 47.5% in the year-ago period.
Selling and administrative expenses totaled $641.02 million, reflecting a 9% increase from the year-ago figure. It represented 27.4% of net sales. The operating margin in the reported quarter was 21.4% compared with 20.3% in the year-ago quarter. Interest expenses decreased 11.5% to $24.54 million.
Balance Sheet and Cash Flow
Exiting the fiscal first quarter, Cintas had cash and cash equivalents of $88.13 million compared with $124.15 million at the end of fiscal 2023. Long-term debt was $2.48 billion compared with $2.49 billion at the end of fiscal 2023.
At the end of the fiscal first quarter, CTAS generated net cash of $336.95 million from operating activities, up 13% from the year-ago period. Capital expenditure totaled $106.70 million, up 52.4% year over year. Free cash flow inched up nearly 1% year over year to $230.25 million.
In the first quarter of fiscal 2024, the company repurchased shares worth $73.28 million compared with $320.33 million in the year-ago period. In the reported quarter, dividend payments totaled $117.57 million, up approximately 20.4% year over year.
Fiscal 2024 Guidance Improved
For fiscal 2024, Cintas now expects revenues of $9.40-$9.52 billion compared with $9.35-$9.50 billion anticipated earlier. The mid-point of the guided range — $9.46 billion — lies above the Zacks Consensus Estimate of $9.45 billion. Earnings per share are estimated to be in the range of $14.00-$14.45 compared with $13.85-$14.35. The mid-point of the guided range — $14.23 — lies below the Zacks Consensus Estimate of $14.29.
Cintas predicts interest expense of approximately $98 million in fiscal 2024. This compares with interest expense of $109.5 million recorded in fiscal 2023. The effective tax rate is expected to be 21.3% compared with 20.4% recorded in fiscal 2023.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Cintas has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Cintas has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Cintas (CTAS) Up 4.3% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Cintas (CTAS - Free Report) . Shares have added about 4.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Cintas due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Cintas Q1 Earnings & Revenues Top Estimates, Increase Y/Y
Cintas reported first-quarter fiscal 2024 (ended Aug 31, 2023) earnings of $3.70 per share, which beat the Zacks Consensus Estimate of $3.65. The bottom line increased 9.1% year over year despite high costs.
Total revenues of $2,342.3 million outperformed the Zacks Consensus Estimate of $2,324.8 million. The top line climbed 8.1% year over year due to higher segmental revenues. Organic sales were also up 8.1% year over year.
Segmental Results
The company has two reportable segments - Uniform Rental and Facility Services and First Aid and Safety Services. Other businesses like Uniform Direct Sale and Fire Protection Services are included in All Other. Quarterly sales data is briefly discussed below.
Revenues from the Uniform Rental and Facility Services segment (representing 78% of the reported quarter’s net sales) totaled $1,826.83 million, up 7.6% year over year. Our estimate for segmental revenues was $1,814.3 million.
Revenues from the First Aid and Safety Services segment (representing 11.1% of the reported quarter’s net sales) totaled $260.69 million, up 11.3% year over year. Our estimate for segmental revenues was $247 million.
Revenues from All Other business (representing 11.4% of the reported quarter’s net sales) totaled $254.81 million, up 8.6% year over year. Our estimate for segmental revenues was $251 million.
Margin Profile
In the quarter under review, Cintas’ cost of sales (comprising costs related to uniform rental and facility services and others) increased 5.4% year over year to $1.20 billion. It represented approximately 51.3% of net sales. Gross profit increased 11% to $1.14 billion. The gross margin was 48.7% in the reported quarter compared with 47.5% in the year-ago period.
Selling and administrative expenses totaled $641.02 million, reflecting a 9% increase from the year-ago figure. It represented 27.4% of net sales. The operating margin in the reported quarter was 21.4% compared with 20.3% in the year-ago quarter. Interest expenses decreased 11.5% to $24.54 million.
Balance Sheet and Cash Flow
Exiting the fiscal first quarter, Cintas had cash and cash equivalents of $88.13 million compared with $124.15 million at the end of fiscal 2023. Long-term debt was $2.48 billion compared with $2.49 billion at the end of fiscal 2023.
At the end of the fiscal first quarter, CTAS generated net cash of $336.95 million from operating activities, up 13% from the year-ago period. Capital expenditure totaled $106.70 million, up 52.4% year over year. Free cash flow inched up nearly 1% year over year to $230.25 million.
In the first quarter of fiscal 2024, the company repurchased shares worth $73.28 million compared with $320.33 million in the year-ago period. In the reported quarter, dividend payments totaled $117.57 million, up approximately 20.4% year over year.
Fiscal 2024 Guidance Improved
For fiscal 2024, Cintas now expects revenues of $9.40-$9.52 billion compared with $9.35-$9.50 billion anticipated earlier. The mid-point of the guided range — $9.46 billion — lies above the Zacks Consensus Estimate of $9.45 billion. Earnings per share are estimated to be in the range of $14.00-$14.45 compared with $13.85-$14.35. The mid-point of the guided range — $14.23 — lies below the Zacks Consensus Estimate of $14.29.
Cintas predicts interest expense of approximately $98 million in fiscal 2024. This compares with interest expense of $109.5 million recorded in fiscal 2023. The effective tax rate is expected to be 21.3% compared with 20.4% recorded in fiscal 2023.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Cintas has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Cintas has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.