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Ahead Of The Bell: Cintas Estimates Cut

The Associated Press

HARTFORD, Conn. (AP) — An analyst cut his profit estimates for Cintas Corp. Thursday, a day after the corporate uniform supplier said its fiscal third-quarter profit fell 12 percent due to the slowing economy.

Citi Investment Research analyst Ashwin Shirvaikar cut his 2009 earnings estimate for the Cincinnati company to $1.93 from $2.04 and reduced his estimate for next year to $1.97 from $2.19.

Analysts surveyed by Thomson Reuters expect earnings this year to be $1.99 per share. For next year, analysts expect earnings to be $2.14 per share.

Shirvaikar reiterated a "Hold" rating.

In a note to investors, he said Cintas' uniform rental business "is likely to deteriorate due to the impact of macro-economic conditions."

Specific risks to its share price include more job losses, the potential for fuel costs to rise significantly, Cintas' exposure to the beleaguered U.S. auto industry and the potential for the depreciation of Canadian currency relative to the dollar, Shirvaikar said.

However, Cintas's shares could exceed his target price, which he cut to $22 from $23, "if there is the perception of a bottoming and subsequent recovery in job growth" in the United States or if energy costs continue to decline, he said.

Cintas said Wednesday it earned $71.8 million, or 47 cents per share, down from $81.8 million, or 53 cents per share, during the same period last year.

Revenue fell 7 percent to $908.6 million, from almost $976 million a year ago.

Analysts surveyed by Thomson Reuters expected a profit of 48 cents per share on revenue of $959.4 million.

Shirvaikar said the revenue miss was drastic by Cintas' standards. He cited the impact of client layoffs and hiring freezes.

"While this should persist, lower energy costs and impressive cost takeouts helped limit the earnings-per share miss," he said. "The environment will likely not improve in the near-term, but becoming leaner is a long-term plus for Cintas."