Analyst Note| Joshua Aguilar |
Wide-moat Cintas reported fourth-quarter results that were slightly ahead of our expectations. We plan to increase our fair value about 3% to 5% and will re-evaluate when the firm releases its 10-K and we roll our model for fiscal year 2021. This increase in our fair value is driven by our improved revenue and margin outlook, as well as time value of money. Fourth-quarter revenue increased 13% year over year, while fiscal year revenue increased 0.4%. For the uniform rentals and facilities services segment, fourth-quarter revenue increased roughly 15% year over year, but was up only 0.8% for the fiscal year. Government shutdowns led many companies to shift to work-from-home models in the fourth quarter of fiscal year 2020, causing a slowdown in sales. The segment was up roughly 3% sequentially and we expect mid-single-digit growth over the next year as offices reopen and demand increases.