Improved uniform sales led to a 13.1% revenue jump for Cintas during the most-recent quarter.
We think the company’s revenue and earnings will continue to rise as more businesses, particularly airlines and hotels, rebound.
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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 21.3%, from $6.48 billion in 2018 to a record $7.85 billion in 2022 (fiscal years end May 31).
Earnings from ongoing operations rose 12.6%, from $783.9 million in 2018 to $882.6 million in 2019. Due to fewer shares outstanding, earnings per share gained 13.4%, from $7.03 to $7.97. Earnings then dipped 0.7% to $876.4 million in 2020 as the company cut jobs due to COVID-19; per-share earnings improved 1.8% 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. If you factor out a gain on the sale of smaller operations and other unusual items, earnings per share still gained 10.2%, rising to $11.28 in 2022.
Growth Stocks: Revenue and earnings both rise and beat consensus estimates for Cintas
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 2023 second quarter, ended November 30, 2022, Cintas’s revenue rose 13.1%, to $2.17 billion from $1.92 billion a year earlier. That beat the consensus forecast of $2.13 billion. If you factor out acquisitions and exchange rates, revenue still improved 12.8%.
The company’s overall earnings in the quarter gained 10.1%, to $324.3 million from $294.7 million. Due to fewer shares outstanding, per-share earnings rose 13.0%, to $3.12 a share from $2.76. That also beat the consensus estimate of $3.03 a share.
Cintas now expects to earn between $12.50 and $12.80 a share for all of fiscal 2023. That’s up from its earlier prediction of $12.30 to $12.65 a share. The stock trades at 34.5 times the midpoint of that new range. That’s a high p/e, but still acceptable given the company’s leading position in its niche market and its improving profitability.
With the September 2022 payment, Cintas also raised your quarterly dividend by 21.1%, to $1.15 a share from $0.95. The new annual rate of $4.60 yields 1.1%. The company has increased the dividend each year since it went public in 1983.
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