Cintas Corporation (
Cintas provides highly specialized services to businesses of all
types throughout North America. It is the largest company in its
space and services more than 900,000 businesses. Founded in
1983, Cintas has become the go-to for everything from the design,
manufacture and implementation of corporate identity uniform
programs to entrance mats, restroom supplies, promotional products,
document management and even fire protection, first aid and safety
They have over 430 facilities in the US and Canada that employ
over 30,000 people. The rental division is still the
company's largest but is just a part of their overall pie.
You will find Cintas' floor mats, first aid kits, fire alarms and
suppression systems, hand soaps and air fresheners in many large
and mid-size companies across the US.
, I noted the bullish fundamental strength of Cintas and the
bullish tone the company took since realizing that they could
deliver strong results even in challenging times. An
improving jobs market and consumer outlook seems to be having a
direct positive effect on Cintas. Anecdotally, it
seems plausible that many consumers and employers alike went into
"panic mode" once the recession hit 3 years ago. Until
recently, this frugal state of mind most likely prevented or slowed
many from spending on discretionary expenses like new uniforms,
mats, first aid kits, etc. In that time, potential
demand built up and now it seems there could be a continued
onslaught of business for companies like Cintas as these
"semi-discretionary" items become a necessity.
Another Strong Quarter
Cintas delivered strong Q3 2012 earnings on March 20th of 58 cents
per share. Earnings were 41.5% higher than the 41 cents
reported in the year-ago quarter; net income increased by 28.7% to
$76 million. The Zacks Consensus Estimate was for 52 cents ahead of
the number. Total revenues in the quarter increased 7.9% year
over year to $1.012 billion, beating the Zacks Consensus Estimate
of $1.008 billion. Organic growth in the quarter was 5.9%.
Their most recent quarter's beat kept their earnings surprises
on a role; over the past year they have exceeded expectations by an
average of over 13%.
On the most recent call, Cintas updated their guidance for fiscal
2012. They now expect 2012 revenue to be in the range of $4.09
billion to $4.12 billion with EPS in the range of $2.24 to $2.27.
They offered this guidance with the caveat that there is no further
deterioration in the U.S. Economy.
According to the Zacks Consensus Estimate, expectations are for
Cintas to generate $0.59 in income this quarter. Of the 12
analysts who cover CTAS, the consensus is for the company to grow
earnings by 34% in the current year (FY2012) and roughly 11.4% in
In terms of the magnitude of analyst estimate trends, we are
still seeing all of the consensus estimates higher than they were
90 days ago for the current and next quarters as well as FY2012 and
FY2013. There have been a slew of positive revisions following
the most recent earnings announcement.
The stock is now a Zacks Rank 2 Buy.
Market Performance & Technicals
While the earnings report was good, it turned out to be a "buy on
rumor, sell on news" event, sending shares off 4% from their 52
week high of $40.61 reached just the day prior.
For the first time since December 2011, CTAS closed below its 50
day moving average, which now stands at $38.78. If the stock
can get back above that level, it will once again become
support. For the time being, it seems like a bit of
resistance the stock needs to break through. The 200 day is
quite a bit lower at $33.25.
CTAS has exceeded the S&P 500's performance by 23% in the
past year but has begun to lag in the last 90 days due to its
consolidation and move lower.
This Week's Momentum Zacks Rank Buy Stocks:
ULTA Beauty (
When you think of the return of the American consumer, the last
thing on your mind is hairspray, perfume and skincare products; but
the fact of the matter is that Ulta Beauty and competitors like
Sally Beauty Supply
might already be reaping the rewards of a stronger consumer who is
armed with credit and ready to make a fresh start.
Recent economic data supports the thesis that consumer strength
and spending is indeed improving. Ulta is what I would
consider a "discretionary-staple" company in that they offer many
of the day to day aesthetic needs of American consumers (mostly
women, but men as well) which help keep revenue flowing under
normal financial circumstances. In times of growth,
ULTA will enjoy higher net sales, but also a gravitation towards
high price, high margin products and services.
READ FULL STORY
Old National Bank (
Old National Bank is one of those companies that you probably never
heard of and if it weren't for TARP and the warrants that were
issued in conjunction with TARP, I would have most likely
overlooked it as well.
Back in 2009, ONB was given a gracious gift by the government in
the form of a cheap buyback of their warrants. In short, the
bank was able to buy back their stock warrants that were owned by
the treasury for about 20% of their real value, saving them
millions of dollars. This ended up costing the taxpayer, but all
worked out well for this regional bank.
Three years later, ONB is being recognized by the Ethisphere
Institute as one of the World's Most Ethical Companies (not that
they did anything wrong with TARP) and has been delivering strong
earnings results over the past year. In the financial sector,
regionals like ONB are sometimes preferred because they don't
typically carry the same risks as thier much larger multi-national
READ FULL STORY
Old Dominion Freight Line (
22 years before Dwight D. Eisenhower formed the national interstate
system in the US, Old Dominion was moving freight around this
country. 80 years after its humble beginnings,
was recently named the number 1 LTL (less than truckload)
Trucking is in integral part of interstate commerce here in the
states and with almost 12,000 employees and roughly 6,000 tractors
to pull their 16,000 pup trailers and 6,300+ vans, ODFL is a major
player in the space. They may not be the largest, but they
were the fastest growing; sales rose 25.7 percent in 2011 to $1.7
billion according to a study by SJ Consulting Group in Pittsburgh.
The LTL trucking sector as a whole grew 11.6 percent in 2011
compared to 2010, netting $30.6 billion in the year.
With higher gas prices and a challenging consumer environment,
can these trends continue?
READ FULL STORY
Red Robin Gourmet Burgers (
I have dined at a couple Red Robins in my day and had no idea they
were a public company until about a week ago. You'd think
after ranking as the #1 Best Burger (chain stores) 3 years in a row
from Zagat; they would be on my radar being that I'm a connoisseur
of fine ground beef in a bun and a stock junkie.
After listening to their commercial about 20 times I had their
chime in my head, but it was a random trip out to Garland Texas
that introduced me to one of the 462 restaurants in the
chain. It was worth the trip if you like burgers and other
On the surface, my biggest complaint would be obviously be
visibility, unlike competitors like Chipotle Mexican grill, which
seems to be everywhere you look (physically and in financial
circles), Red Robin is a bit harder to find. Red Robin does
have diversity in its offerings with everything from ribs to shrimp
tacos to fish and chips, which add to its attraction. When
you compare the two, Chipotle (
) is currently trading at more than 50 times forward earnings,
while Red Robin is at about 19 times. Perhaps there is still
some value in this unique burger chain.
READ FULL STORY
Jared A Levy is the Senior Stock Strategist for Zacks.com.
He is also the Editor in charge of the market-beating
Zacks Whisper Trader Service.
CINTAS CORP (
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