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.
For a rising portfolio
Learn everything you need to know in 'How to Find the Best Growth Stocks' for FREE from The Successful Investor.
Canadian Growth Stocks: CGI Group, CAE Inc., Fortis Inc. Stock and more.
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.