Cintas Corp (CTAS, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $696.01, Cintas Corp has witnessed a daily gain of 9.88%, marked against a three-month change of 15.87%. A thorough analysis, underlined by the GF Score, suggests that Cintas Corp is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 7/10
- Profitability rank: 10/10
- Growth rank: 10/10
- GF Value rank: 3/10
- Momentum rank: 9/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in financial strength, profitability, and growth, but a lower GF Value rank, GuruFocus assigned Cintas Corp the GF Score of 93 out of 100, which signals the highest outperformance potential.
Understanding Cintas Corp Business
Cintas Corp, with a market cap of $70.56 billion and sales of $9.19 billion, operates with an impressive operating margin of 20.86%. The company is positioned as a one-stop shop that rents/sells uniforms and ancillary products and services, such as mops, first aid kits, and fire inspections. In its core uniform and facility services unit (a majority of sales), Cintas provides uniform rental programs for items including office attire, custom-tailored apparel, flame-resistant clothing, lab coats, and other profession-specific clothing. Facilities products generally include the rental and sale of entrance mats, mops, shop towels, hand sanitizers, and restroom supplies. Cintas' remaining businesses include first aid and safety services, fire protection services, and uniform direct sales.
Financial Strength Breakdown
According to the Financial Strength rating, Cintas Corp's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Cintas Corp stands impressively at 18.14, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5. With an Altman Z-Score of 11.58, Cintas Corp exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.31, Cintas Corp's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Cintas Corp's impressive standing among its peers in generating profit. Cintas Corp's Operating Margin has increased over the past five years, with the latest figure at 20.45%. Furthermore, the company's Gross Margin has also seen a consistent rise, reaching 47.34% in 2023. This trend underscores the company's growing proficiency in transforming revenue into profit. The Piotroski F-Score confirms Cintas Corp's solid financial situation, and its strong Predictability Rank of 5.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Cintas Corp demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 8.8%, which outperforms better than 58.62% of 986 companies in the Business Services industry. Moreover, Cintas Corp has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years, with a three-year growth rate of 14.1 and a five-year rate of 12.8. This trend accentuates the company's continued capability to drive growth.
Conclusion: Cintas Corp's Position for Outperformance
Considering Cintas Corp's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. The company's strategic approach to managing its balance sheet, its ability to generate profits efficiently, and its commitment to growth are key indicators of its competitive edge in the market. Investors looking for similar opportunities can explore more companies with strong GF Scores using the GF Score Screen provided by GuruFocus.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
