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CTAS STOCK WRITE UP


CTAS (CINTAS CORPORATION)

  • P/E: 26.8
  • GAAP DILUTED YEAR-OVER-YEAR EPS GROWTH LAST QUARTER: $.02
  • SECTOR: CONSUMER SERVICES
  • ASSETS-LIABILITIES: 2.09
  • DIVIDEND: 1.06%

CTAS is a company providing uniforms to major companies. They report 7/20/17 after the market close. The company is profitable, and has acquired smaller businesses to grow its revenue, while selling a paper-shredding company it had previously acquired.
The company has more cash than debt. Inventories increased by 9%, and revenue increased by 5.3%. Income before taxes grew 2.5%, and $642,000 in losses from discontinued operations and a $9 million acquisition expense reduced the profit improvement to just under 2%. The majority of revenue is derived from uniform rental services. According to wikinvest, CTAS has 30% of market share for uniform rentals due to its commitment to providing specialized products to fit customer needs.
Cintas was founded as The Acme Industrial Laundry Company in 1929 by Richard T Farmer, and changed its name upon its IPO in 1983. Scott Farmer is the founder's son, and has been CEO since 2003. Cintas acquired G&K, another uniform rental company, in a deal that closed 3/21/2017. Shred-it, a document shredding company, was sold by Cintas in 2016, and losses from the discontinuation of that service were realized in Q2 2017.
CTAS' largest competitor is UNF (Unifirst Corporation). It trades at a slight premium to UNF, and CTAS' revenue grew 14% between 2013-2016, compared to 7% for UNF in the same period. CTAS has beat, or met expectations in each of the last 7 quarters, with the exception of 1 quarterly report. CTAS has a dividend yield with ten times the value of UNF's.
Reporting 7/20/17 after the close, CTAS will try to continue its trend of earnings beats. CTAS' share price has risen 9% year-to-date at the time of writing this article. After its last three quarterly earnings reports, CTAS dropped $5, $3, and $3 in the following month.

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