Small Acquisitions Spur Big Profit Gains

Article Excerpt

CINTAS CORP. $41 (Nasdaq symbol CTAS; Aggressive Growth Portfolio, Manufacturing & Industry sector; WSSF Rating: Average) earned $85.0 million in its first fiscal quarter ended August 31, 2006, up 8.4% from $78.4 million a year earlier. The company is an aggressive buyer of its own stock. Consequently, per-share earnings grew 15.2%, to $0.53 from $0.46, due partly to fewer shares outstanding. Revenue rose 11.0%, to $914.2 million from $823.5 million. Part of the company’s growth has come from acquisitions. These are mostly smaller companies that expand the number of products and services that Cintas can offer to its uniform rental customers. The company is also buying up competing uniform suppliers. The top four companies in this business account for just 40% of the market, so there’s plenty of opportunity for Cintas to increase its market share with minimal risk. The stock fell to just under $35 in August as rising gasoline prices increased transportation costs. But fuel costs are leveling off, and demand for…

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