If you have watched Cintas Nasdaq: CTS Stock prices have risen over the past decade and perhaps you were waiting for a drop after a stock split to buy or buy more, your hopes have come true. The stock price began a correction in early December, which turned into a full capital “C” correction with the FQ2 2025 release. After falling 20% after its release, chances are high that the Cintas stock price is near the bottom, and it will soon be time to buy it again. .
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(As of 09:09 AM ET)
- 52 week range
- $142.18
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$228.12
- Dividend yield
- 0.87%
- P/E ratio
- 45.45
- Price target
- $199.70
Cintas’ Q2 results weren’t bad. It has been good, with strong growth and margin supporting balance sheet health and capital returns. The only problem is that results were mixed relative to consensus, and trading at roughly 50 times earnings expectations, growth was likely a consideration. This high-quality cash flow and capital return machine is now trading at a still high but more reasonable 43 times. The 2025 forecast, but more importantly, is less than 23 times the long-term forecast, making it a bargain. Analysts expect profits to double over the next ten years, a reasonable and perhaps cautious estimate given prevailing trends.
Cintas goes down with mixed results. Sustains growth and expands margin
Cintas had a strong quarter and gave no reason to sell the market in its second-quarter results. Revenue of $2.56 billion came in as expected but was up 7.8% year-over-year thanks to strength in both segments. The core uniform sector rose 7.6%, led by an 8.5% increase in the other smaller sector. Other services include Zee Medical first aid, fire and safety work.
Margin news is better than revenue, leading to outperformance in the bottom line. Gross margin expanded by 180 basis points and operating margin by 210 basis points on cost control and spending discipline. The net result is a 19.7% increase in net income and expectations of continued margin strength. Importantly, cash flow and free cash flow improved significantly, with free cash flow up 35% in the first six months of the year.
Guidance is another area of strength. The company improved its bottom-line and top-line guidance, raising the low-end range and midpoint of revenue while significantly raising expectations. The new earnings range places the lower bound above the previous upper bound and may be cautious. Labor markets remain healthy. November data shows sustained growth in employment, increased working hours, and adequate availability.
Cintas Capital’s returns are safe, reliable and growing
Cintas dividend payments
- Dividend yield
- 0.85%
- Annual profits
- $1.56
- Increasing track record profits
- 42 years old
- Annual earnings growth for 3 years
- 92.59%
- Dividend distribution ratio
- 39.39%
- Recent dividend payment
- December 13
CTAS Dividend Date
Cintas is among the healthiest dividend-paying stocks on the market, maintaining a strong balance sheet with self-funding growth and returning capital to shareholders. Returns of capital include dividends and buybacks, reducing the number each year. Buybacks in the second quarter of the year reduced the number by 0.6%.
They are expected to continue to reduce the number in the back half of the fiscal year and throughout 2025. The balance sheet highlights the effects of this year’s acquisitions and capital returns, with cash lower and liabilities higher. However, the net effect is flat stocks and an 8% increase in treasury equity, and leverage remains low with long-term liabilities reduced to less than 1x.
Analysts have not yet commented on Cintas’ results but were supportive of price action in 2024. Consensus sentiment fell to Hold from Moderate Buy as the share price rose with the consensus price target. The revision trend raises the consensus target for this industrial stock by roughly 50% in 2024, putting the market at $200 in 2025. The revision trend suggests a potential move to the upper range, good for a 30% gain from $185. level. Institutions also supported the share price in 2024, buying in balance for all four quarters of the year.
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