Over the last six months, Cintas’s shares have sunk to $174.07, producing a disappointing 7.4% loss - a stark contrast to the S&P 500’s 3.5% gain. This may have investors wondering how to approach the situation.
Following the pullback, is this a buying opportunity for CTAS? Find out in our full research report, it’s free.
Why Is CTAS a Good Business?
Starting as a family business collecting and cleaning shop rags in Cincinnati, Cintas (NASDAQ: CTAS) provides corporate identity uniforms, facility services, and safety products to over one million businesses across North America.
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Cintas grew its sales at an impressive 9.8% compounded annual growth rate. Its growth beat the average business services company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Cintas’s EPS grew at 16.4% compounded annual growth rate over the last five years, higher than its 9.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Cintas has shown terrific cash profitability, enabling it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company’s free cash flow margin was among the best in the business services sector, averaging 16.4% over the last five years.
Final Judgment
These are just a few reasons Cintas is a high-quality business worth owning. With the recent decline, the stock trades at 33× forward P/E (or $174.07 per share). Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
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