Cintas Corporation: Earnings Preview

| About: Cintas Corporation (CTAS)

Cintas Corporation (NASDAQ:CTAS) is slated to report its third-quarter 2012 financial results after the closing bell on March 20. The Zacks Consensus Estimate for the quarter is 52 cents per share, representing an estimated year-over-year increase of 26.42%. Revenues as per the Zacks Consensus Estimate are $1.01 billion.

Second-Quarter Synopsis

The company, in the second quarter (ended November 30, 2011), reported earnings of 57 cents per share, comfortably surpassing the Zacks Consensus Estimate of 48 cents per share and exceeding the year-ago earnings of 38 cents.

Revenues increased 9% year over year to a record $1.02 billion, surpassing the Zacks Consensus Estimate of $1 billion.

Cintas, which competes with G&K Services, Inc. (GKSR) and privately held Alsco Inc. and ARAMARK Corporation, experienced growth in the top-line because all its segments (other than Document Management Services) reported steady revenue increase in the second quarter.

Estimate Revisions Trend


Out of the 12 analysts covering the stock, 2 have revised their estimates for the third quarter in the upward direction over the last 30 days with no reverse movements. A similar trend applies for fiscal 2012. There were no movements in either direction over the past week.


The Zacks Consensus Estimates remained the same for both the third quarter and fiscal 2012 over the last 7 and 30 days.

Earnings Surprise History

With respect to earnings surprise, Cintas has topped the Zacks Consensus Estimate over the last four quarters in the range of 10.6% to 18.8%. The average remained at a positive 13.7%, indicating that the company has topped the Zacks Consensus Estimate by the same magnitude in the trailing four quarters.

Our Take

The analysts have revised their estimates on Cintas upwards, following its better-than-expected second quarter earnings results. The upward revision can be attributed to its strong performances in all divisions except Document Management, raised revenue and earnings per share guidance for 2012, solid organic growth and margin expansion despite cost headwinds.

Recently, the company has partnered with ScanMD in order to switch on to electronic medical records (NYSE:EMR), instead of maintaining elaborate paper charts and files. The new alliance is expected to improve the Document Management Services segment of the company by curtailing the cost as well as labor of maintaining paper records.

Our long-term recommendation on Cintas remains Outperform. Currently, the stock retains a Zacks#2 Rank, implying a short-term “Buy” rating.

CINTAS CORP (CTAS): Free Stock Analysis Report

G&K SVCS A (GKSR): Free Stock Analysis Report