Cintas Earnings: We Raise Our Fair Value Estimate by 12% After Strong Results

Wide-moat Cintas reported solid fiscal 2024 second-quarter results, with growth in all three business segments. We've raised our discounted cash flow-derived fair value estimate by 12%, to $460 per share from $410, as we give the firm more credit for strong execution on longer-term revenue growth and margin gains. We have significant confidence in the firm’s sales execution, along with its ability to consistently boost margins via greater route density and operational efficiency, some of which is IT-driven. However, we still think the stock is overvalued, as it currently trades in 2-star territory.