Cintas reported solid fiscal 2014 fourth quarter results with
nearly 50% year-over-year increase in earnings and beat 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
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, First Aid, Safety and Fire Protection, and Document
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
The Document Management Services segment comprises document
storage and imaging services subsequent to the divestiture of the
Document Shredding business.
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