Cintas Corporation (CTAS): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report


Cintas reported solid fiscal 2014 third quarter results with 15% year-over-year increase in earnings although it marginally missed the Zacks Consensus Estimate by $0.01. The new partnership of the company with the shareholders of Shred-it International Inc is expected to reap synergistic benefits in the long run. Cintas expects to extend its global footprint and strengthen its position in existing markets through continuous organic growth across the industry verticals and a diligent execution of its operational plans. However, an increase in raw material costs and challenging macroeconomic conditions could weigh on the margins moving forward. Moreover, intense competitive pressure and foreign currency risks are likely to peg back its profitability to some extent. Nevertheless, we maintain our Neutral recommendation on the stock.


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 Services.

The Rental Uniforms and Ancillary Products segment (71% of revenues in the third quarter of fiscal 2014): The 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 services.

The Other Services segment (29%): The segment consists of Uniform Direct Sales, First Aid, Safety and Fire Protection, and Document Management.

The Uniform Direct Sales segment (10%) 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 (11%) 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 services.

The Document Management Services segment (8%) comprises mainly document shredding services, though the company does have some storage capabilities.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks

Referenced Stocks: CTAS

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As of 7/11/2014, 04:03 PM