NEW YORK (TheStreet) -- With better-than-expected results released from UniFirst (UNF) - Get Report, it would seem the recent decline in the industrial sector, driven by weak oil prices, has reached a bottom. And this bodes well for industrial company Cintas (CTAS) - Get Report, which supplies and services uniforms and workwear to various industries.
Cintas, headquartered in Cincinnati, Ohio, reports fourth-quarter fiscal 2015 earnings results Thursday after the close. Although the company's profit margins have been under pressure due to -- among other things -- a higher cost of materials, Cintas has remained profitable for 11 consecutive quarters.
It's poised to extend that streak Monday. The average analyst earnings estimate points to 10% year-over-year growth, and earnings of 84 cents a share.
By placing an emphasis on profitability, Cintas' management team has developed a formula to reward shareholders with 244% stock gains over the past five years. During that span, Cintas shares have more than tripled in value, from around $25 to current levels of around $86, including a gain of 9.7% so far in 2015.
It's not hard to see why. In the past six quarters, not only has Cintas beaten Wall Street's average earnings estimates five times, the company grew earnings per share by an average of 20% year over year.
Cintas stock doesn't scream value today at 23 times earnings, against an average price-to-earnings ratio of 21 for the S&P 500 (SPX) index. But it's not time to sell yet. More gains are on the horizon.
Why? As the economy and the labor market continue to improve, Cintas' business is poised to benefit from higher demand in uniforms and workwear. What's more, not only does Cintas' management continue to divest from various unprofitable businesses like document storage, the company is still growing its uniform rental business -- its largest business segment.
Need another reason to hold or buy more shares? Cintas is still in the midst of a stock buyback program that has some $700 million to go. And Cintas is poised to keep buying back its stock. Investors should too, ahead of Thursday's results.
For the quarter that ended in May, earnings are expected to be 84 cents a share, up 10% year over year, while revenue for the quarter is projected to fall 1% year over year to $1.15 billion. For the full year, earnings are projected to climb 20% year over year to $3.35 a share, while full-year revenue of $4.48 billion would mark a 1.5% decline.
Cintas is highly focused on profitability and returning value to shareholders. It would be a mistake to part with this winner, especially with the improvement seen in the industrial sector. With shares trading at around $86, investors can expect the stock to reach $95 to $100 in the next 12 to 18 months.
This article is commentary by an independent contributor. At the time of publication, the author held no position in the stocks mentioned.