We are changing our recommendation on Cintas from Neutral to
Outperform largely on the back of positive earnings estimate
revisions. Cintas reported solid fiscal 2015 first quarter results
with nearly 26% year-over-year increase in earnings, surpassing the
Zacks Consensus Estimate by $0.02. The company is witnessing strong
growth across major segments, and is looking to build on this
momentum, as it increasingly focuses on fast-growing rental first
aid and direct sale businesses. Cintas also enjoys significant
scale advantages with regard to its route-based network, which in
turn boosts its competitiveness. In addition, its new partnership
with Shred-it International's shareholders is expected to reap
synergistic benefits in the long run. However, intense competitive
pressure and foreign currency risks might peg back its
profitability to some extent.
Based in Cincinnati, Ohio, Cintas Corporation provides
specialized services to businesses of all types throughout North
America. The company designs, manufactures, implements corporate
identity uniform programs, and provides entrance mats, restroom
supplies, promotional products and first aid and safety products
for diversified businesses. Cintas operates under two operating
segments, Rental Uniforms and Ancillary Products, and Other
The Rental Uniforms and Ancillary Products: This segment designs
and manufactures corporate identity uniforms, which, along with
other garments, mats, mops and shop towels, are rented out. The
segment also provides restroom and hygiene products and
The Other Services: This segment consists of Uniform Direct
Sales and First Aid, Safety and Fire Protection.
The Uniform Direct Sales segment includes the company's national
account sales division, which directly sells uniforms, brand-new
promotional products and other related products to customers such
as airlines, hotels, and restaurants of the region. It also
includes Cintas' direct sale catalog, which directly sells uniforms
and related products, primarily to local customers, who also rent
products from the company.
The First Aid, Safety, and Fire Protection Services segment is
involved in the on-site delivery of first aid products, safety
products and automatic defibrillators, and provides safety training
to the Cintas Corporation's customers and their employees. The
company inspects repairs and recharges portable fire extinguishers
and sprinkler systems, and provides and services emergency lighting
systems as well as kitchen fire suppression systems. Cintas is the
largest on-site provider of first aid and safety products in North
America and the second largest provider of fire protection
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