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Cintas Corp CTAS

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Morningstar’s Analysis

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5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

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Cintas Reports Margin Improvement Amid Underwhelming Revenue, Shares Are Still Overvalued

Joshua Aguilar Equity Analyst

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.

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Company Profile

Business Description

In its core uniform and facility services unit (80% of sales), Cintas provides uniform rental programs to businesses across the size spectrum, mostly in North America. The firm is by far the largest provider in the industry. Facilities products generally include the rental and sale of entrance mat, mops, shop towels, and restroom supplies. Cintas also runs a first aid and safety services business (11% of sales), a fire protection services business (6% of sales), and a uniform direct sales business (3% of sales).

Contact
6800 Cintas Boulevard, P.O. Box 625737
Cincinnati, OH, 45262-5737
T +1 513 459-1200
Sector Industrials
Industry Specialty Business Services
Most Recent Earnings May 31, 2021
Fiscal Year End May 31, 2021
Stock Type Cyclical
Employees 40,000

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