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Reasons to Retain Cintas (CTAS) Stock in Your Portfolio Now
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Cintas Corporation (CTAS - Free Report) is poised to gain from strong segmental performances and product enhancement efforts despite rising costs and forex woes.
Let us discuss the factors that should influence investors to retain the stock for the time being.
Growth Catalysts
Business Strength: Strong segmental performances are driving Cintas’ top line. Strong momentum in the energy end market is driving revenues in the Uniform Rental and Facility Services segment. Also, investments in technology and the company’s capability to weed out inefficiencies from the business through Six Sigma bode well for the segment. Increasing demand for AED Rentals, eyewash stations and WaterBreak products is boosting the First Aid and Safety Services segment’s performance.
Given the strength across its segments, Cintas has provided a bullish forecast for fiscal 2024 (May 2024). The company expects revenues of $9.57-$9.60 billion. The midpoint of the guidance, $9.585 billion, indicates year-over-year growth of 8.7%. Earnings per share are estimated to be in the range of $14.80-$15.00. The midpoint of the guided range, $14.90, reflects a year-over-year increase of 14.7%.
Accretive Acquisition: Acquisitions form a key part of Cintas’ strategy to build market share. The company acquired Paris Uniform Services, a family-owned supplier of uniform and facility service solutions, in March 2024. The buyout enhances Cintas’ service delivery capacity. In February 2024, the company acquired SITEX to strengthen its leading market position in the central Midwest region of the United States.
Product Enhancement Efforts: The company's focus on the enhancement of its product portfolio, along with investments in technology and existing facilities, should continue to drive its performance. For instance, the company’s SmartTruck technology enhances its route efficiencies and provides density to the existing routes. Also, Cintas’ focus on operational executions and pricing actions is helping it maintain healthy margin performance. In the first nine months of fiscal 2024 (ended February 2024), the gross margin increased 150 basis points to 48.7% from the year-ago reported number.
Rewards to Shareholders: Cintas’ measures to reward its shareholders through dividend payments and share buybacks are noteworthy. In the first nine months of fiscal 2024, dividend payments totaled $393.3 million, up 18.3% year over year. Cintas repurchased shares worth $468.1 million in the same period, up 26.2% year over year. The company hiked its quarterly dividend by 17.4% to $1.35 per share in July 2023. Cintas has consistently raised its dividends for 40 straight years.
The company currently carries a Zacks Rank #3 (Hold). CTAS shares have gained 48.6% compared with the industry’s 45.3% growth.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
BDC’s earnings estimates have remained steady for 2024 in the past 60 days. Shares of Belden have risen 5.6% in the past year.
A. O. Smith Corporation (AOS - Free Report) currently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 12%.
The Zacks Consensus Estimate for AOS’ 2023 earnings increased 0.7% in the past 60 days. Shares of A. O. Smith have jumped 34.5% in the past year.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently has a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 10.4%.
The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has increased 1.7% in the past 60 days. The stock has gained 41.9% in the past year.
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Reasons to Retain Cintas (CTAS) Stock in Your Portfolio Now
Cintas Corporation (CTAS - Free Report) is poised to gain from strong segmental performances and product enhancement efforts despite rising costs and forex woes.
Let us discuss the factors that should influence investors to retain the stock for the time being.
Growth Catalysts
Business Strength: Strong segmental performances are driving Cintas’ top line. Strong momentum in the energy end market is driving revenues in the Uniform Rental and Facility Services segment. Also, investments in technology and the company’s capability to weed out inefficiencies from the business through Six Sigma bode well for the segment. Increasing demand for AED Rentals, eyewash stations and WaterBreak products is boosting the First Aid and Safety Services segment’s performance.
Given the strength across its segments, Cintas has provided a bullish forecast for fiscal 2024 (May 2024). The company expects revenues of $9.57-$9.60 billion. The midpoint of the guidance, $9.585 billion, indicates year-over-year growth of 8.7%. Earnings per share are estimated to be in the range of $14.80-$15.00. The midpoint of the guided range, $14.90, reflects a year-over-year increase of 14.7%.
Accretive Acquisition: Acquisitions form a key part of Cintas’ strategy to build market share. The company acquired Paris Uniform Services, a family-owned supplier of uniform and facility service solutions, in March 2024. The buyout enhances Cintas’ service delivery capacity. In February 2024, the company acquired SITEX to strengthen its leading market position in the central Midwest region of the United States.
Product Enhancement Efforts: The company's focus on the enhancement of its product portfolio, along with investments in technology and existing facilities, should continue to drive its performance. For instance, the company’s SmartTruck technology enhances its route efficiencies and provides density to the existing routes. Also, Cintas’ focus on operational executions and pricing actions is helping it maintain healthy margin performance. In the first nine months of fiscal 2024 (ended February 2024), the gross margin increased 150 basis points to 48.7% from the year-ago reported number.
Rewards to Shareholders: Cintas’ measures to reward its shareholders through dividend payments and share buybacks are noteworthy. In the first nine months of fiscal 2024, dividend payments totaled $393.3 million, up 18.3% year over year. Cintas repurchased shares worth $468.1 million in the same period, up 26.2% year over year. The company hiked its quarterly dividend by 17.4% to $1.35 per share in July 2023. Cintas has consistently raised its dividends for 40 straight years.
The company currently carries a Zacks Rank #3 (Hold). CTAS shares have gained 48.6% compared with the industry’s 45.3% growth.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
Belden Inc. (BDC - Free Report) presently has a Zacks Rank #2 (Buy) and a trailing four-quarter earnings surprise of 12.3%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
BDC’s earnings estimates have remained steady for 2024 in the past 60 days. Shares of Belden have risen 5.6% in the past year.
A. O. Smith Corporation (AOS - Free Report) currently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 12%.
The Zacks Consensus Estimate for AOS’ 2023 earnings increased 0.7% in the past 60 days. Shares of A. O. Smith have jumped 34.5% in the past year.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently has a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 10.4%.
The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has increased 1.7% in the past 60 days. The stock has gained 41.9% in the past year.