Improved sales to airlines and hotels helped generate an 8.1% revenue jump for Cintas during the most-recent quarter.
The shares aren’t cheap as the stock trades at 34.1 times the company’s 2024 earnings forecast, but the firm continues to expand its niche dominance and grow profits.
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CINTAS CORP. (Nasdaq symbol CTAS; www.cintas.com) designs and makes uniforms, then sells them to businesses, mainly in North America. It also offers related products and services such as office-cleaning and first-aid kits.
In March 2017, the company completed its biggest purchase to date when it paid $2.2 billion for rival uniform supplier G&K Services. That purchase helped spur Cintas’s revenue by 27.9%, from $6.89 billion in 2019 to a record $8.82 billion in 2023 (fiscal years end May 31).
Earnings from ongoing operations dipped 0.7%, from $882.6 million in 2019 to $876.4 million in 2020 as the company cut jobs due to COVID-19. Due to fewer shares outstanding, earnings per share gained 1.8%, from $7.97 to $8.11.
As the economy re-opened, Cintas’s earnings jumped 26.3% to $10.24 a share (or a total of $1.11 billion) in 2021. Earnings rose a further 11.2%, to $11.65 a share (or $1.24 billion) in 2022, and gained another 11.5% to $12.99 a share (or $1.35 billion) in 2023.
Growth Stocks: Revenue and earnings benefit from Cintas’ re-opening
Cintas continues to benefit as more businesses, particularly airlines and hotels, re-open. The company is also selling more services to its existing clients.
In its fiscal 2024 first quarter, ended August 31, 2023, revenue rose 8.1%, to $2.34 billion from $2.17 billion a year earlier. That matched the consensus forecast.
The company’s earnings in the quarter gained 9.1%, to $3.70 a share (or a total of $385.1 million) from $3.39 a share (or $351.7 million). That topped the consensus estimate of $3.68 a share.
Cintas now expects to earn between $14.00 and $14.45 a share for all of fiscal 2024. That’s up from its previous forecast of $13.85 to $14.35 a share. The stock, which has gained 27% in the past year, trades at 34.1 times the midpoint of that range. That’s a high p/e, but still acceptable given the company’s leading position in its niche market and its improving profitability.
The company also raised your quarterly dividend by 17.4% with the September 2023, payment, to $1.35 a share from $1.15. The new annual rate of $5.40 yields 1.1%.The company has increased the dividend each year since it went public in 1983.
Recommendation in Wall Street Stock Forecaster: Cintas Corp. is a buy.
