Cintas Tops Q4 Earnings Estimates; Target Price $400

Cintas Corp, which provides products and services to businesses, reported better-than-expected earnings in the fiscal fourth quarter and said its revenue rose to $1.84 billion compared to $1.62 billion in last year’s fourth quarter.

The company said its diluted earnings per share (EPS) were $2.47 in the fourth quarter of fiscal 2021, an increase of 83.0% from last year’s fourth-quarter diluted EPS of $1.35. That was higher than the Wall Street consensus estimates of $2.31 per share.

Cintas predicted earnings in a range of $10.35 to $10.75 per share on revenues between $7.53 billion and $7.63 billion for the fiscal year 2022. That was lower than the market expectations of $10.03 per share on revenues of $7.66 billion for the year.

Cintas Corp shares traded 3.18% higher at $380.92 on Friday. The stock rose about 8% so far this year.

Analyst Comments

“4Q above MSe, but FY22 guidance was underwhelming with rev and EPS 1% below our forecast. Guidance does imply margin expansion, however, despite inflationary pressures seen in the industry. price target to $353, though stay EW as multiple remains full,” noted Toni Kaplan, equity analyst at Morgan Stanley.

“We think fundamentals will perform well in a cyclical recovery given CTAS‘ recent history of outperforming labor growth. MS economists are forecasting significant employment growth in coming quarters, with the ending 2022 unemployment rate only 0.7% above 2019 levels. With a strong balance sheet, potential M&A could be extremely accretive to CTAS earnings. Though valuation is high relative to history, we do not see a near-term catalyst to cause the multiple to contract.”

Cintas Corp Stock Price Forecast

Eight analysts who offered stock ratings for Cintas Corp in the last three months forecast the average price in 12 months of $400.67 with a high forecast of $425.00 and a low forecast of $353.00.

The average price target represents a 4.97% change from the last price of $381.69. From those eight analysts, five rated “Buy”, three rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $353 with a high of $601 under a bull scenario and $209 under the worst-case scenario. The firm gave an “Equal-weight” rating on the company’s stock.

Several other analysts have also updated their stock outlook. Jefferies raised the target price to $425 from $400. JPMorgan lifted the target price to $430 from $390. Credit Suisse upped the target price to $375 from $350. CGRA increased the target price by $16 to $366. BofA Global raised the price objective to $358 from $353.

“What to do with CTAS shares: Buy more if you believe the company can consistently deliver 6-8% organic growth and that post-COVID-19 outsourcing picks up on uniform rental. We also believe the under-levered balance sheet is underappreciated in terms of larger-scale M&A,” noted Hamzah Mazari, equity analyst at Jefferies.

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