Have you been paying attention to shares of Cintas (CTAS - Free Report) ? Shares have been on the move with the stock up 6.7% over the past month. CTAS hit a new 52-week high of $184.68 in the previous session. Cintas has gained 18.4% since the start of the year compared to the -6.4% move for the Industrial Products sector and the 16.1% year-to-date return for its peer group.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on March 22, 2018, Cintas reported EPS of $1.37 versus the Zacks Consensus Estimate of $1.24 while it beat the consensus revenue estimate by 1.35%.
For the current fiscal year, Cintas is expected to post earnings of $5.83 per share on $6.44 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $6.97 per share on $6.79 billion in revenues. This represents a year-over-year change of 19.7% and 5.42%, respectively.
Cintas may be at a 52-week high right now, but what might the future hold for CTAS? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Cintas has a Value Score of C. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 31.7X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 28.2X versus its peer group's average of 18.5X. Additionally, the stock has a PEG ratio of 2.64. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Cintas currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 and Style Scores of A or B, it looks as if Cintas meets the list of requirements. Thus, it seems as though CTAS shares could have potential in the weeks and months to come.
How Does Cintas Stack Up to the Competition?
Shares of Cintas have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including KION GROUP (KIGRY - Free Report) , HD Supply Holdings (HDS - Free Report) , and Ashtead Group (ASHTY - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
However, it is worth noting that the Zacks Industry Rank for this group is in the bottom half of the ranking, so it isn't all good news for Cintas. Still, the fundamentals for CTAS are promising, and it still has potential despite being at a 52-week high.