Cintas Corporation's CTAS stock price has increased significantly over the past year. The stock has gained 40.7%, outperforming the industry's 8.9% rally and the Zacks S&P 500 composite's 27.2% growth.
One Year Price Performance
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CTAS has performed better than its industry peers, SPS Commerce, Inc. SPSC and BGSF, Inc. BGSF. SPSC has gained 3.1%, while BGSF has declined 47.7% over the same period.
In the last trading session, the CTAS stock closed at $201.2, 13.4% down from the 52-week high of $228.1.
The question of whether Cintas serves as a buying opportunity after rallying for the past year or if investors should sell the stock remains unanswered. Let us find out.
Strong Segmental Performance Aids Cintas’ Top Line
In the second quarter of fiscal 2025, the top line increased 7.8% year over year. The Uniform Rental and Facility Services segment gained 7.6% from the year-ago quarter, fueled by customer acquisitions, and expanded products and services to existing clients.
Rising demand for Automated External Defibrillator Rentals, eyewash stations, and WaterBreak products drove the First Aid and Safety Services segment’s revenues such that it increased 12.4% from the year-ago quarter.
Product Innovations Fuel CTAS’s Growth
Cintas’ product innovations have been instrumental in the growth trajectory of its four focused verticals (hospitality, education, healthcare, and state and local government) above its normal operating levels, a trend that aligns with management’s observation.
The prime example is CTAS’s technology for garment dispensing. This technology not only helps customers in the healthcare vertical but also in other verticals, wherein they can control the dispensing of inventory. The company has addressed critical customer needs by lowering losses and optimizing distribution.
Cintas caters to customers by evaluating the challenges they face. For instance, the company developed a patented technology in response to the limitations of privacy curtains. This proactive approach shows CTAS’s commitment to customer satisfaction.
The aforementioned innovations hint at product development being the key driver for Cintas’ growth. We believe that the company’s customer-centric approach will assist in gauging market demand, thereby drawing solutions that provide a competitive edge.
CTAS: Eye-Candy for Dividend-Seeking Investors
In fiscal 2022, 2023 and 2024, the company paid out dividends of $375.1 million, $449.9 million and $530.9 million, respectively. The consistency has persisted despite the fluctuations in cash position, underscoring its dedication to creating long-term value for investors.
It significantly increased its quarterly dividend by 15.6% to $1.56 per share in July 2024. Hikes as such can serve well for dividend-seeking investors in the future.
Cintas’s Healthy Capital Returns
Return on equity (ROE), a measure of profitability, reflects how effectively a company uses its shareholders' investments to generate earnings. CTAS’s trailing 12-month ROE is 40.6% compared with the industry’s 29.1%.
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Cintas has also shown strong returns on invested capital (ROIC), with a trailing 12-month ROIC of 15.7%, way higher than the industry’s 12.1%.
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Cintas’ Liquidity Beats Industry
The company has a strong liquidity position, with a current ratio of 1.58 at the end of the second quarter of fiscal 2024, higher than the industry’s 1.42. The metric has gained 3.3% from the preceding quarter due to an increase in cash and cash equivalent. A current ratio above 1 indicates efficient short-term debt coverage capability.
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CTAS’s Strong Top & Bottom-Line Outlook
The Zacks Consensus Estimate for the company’s fiscal 2025 revenues is pegged at $10.3 billion, indicating 7.3% growth from the year-ago reported level. For fiscal 2026, the top line is anticipated to rise 7% on a year-over-year basis.
The consensus estimate for earnings in fiscal 2025 is pegged at $4.3 per share, hinting at 13.7% year-over-year growth. For fiscal 2026, the bottom line is expected to rise 10.7% on a year-over-year basis.
Hurry Up & Buy Cintas Now
Growth across segments, fueled by customer wins, and expanded services and product offerings, improved Cintas’s top line. Customer-centric approach positions the company for continued success.
CTAS provides greater returns on capital than the industry and has a robust liquidity position. Its strong top and bottom-line prospects look promising. Dividend-seeking investors might find the stock appealing.
We suggest investors buy the stock now on the back of the positive factors to enjoy higher capital returns in the long run.
CTAS has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Cintas Corporation (CTAS) : Free Stock Analysis Report
SPS Commerce, Inc. (SPSC) : Free Stock Analysis Report
BGSF, Inc. (BGSF) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
