Why Cintas (CTAS) Stock Is Gaining Today

NEW YORK (TheStreet) -- Shares of Cintas Corp. (CTAS) are higher by 1.97% to $64.09 on Wednesday afternoon after the company reported an increase in revenue and earnings for the 2014 fourth quarter.

For the most recent quarter the company, which provides specialized products and services to a variety of businesses, reported net income was $127.2 million, or $1.03 per diluted share, compared to $32.9 million, or 27 cents per diluted share for the 2013 fourth quarter.

Revenue for the 2014 fourth quarter increased to $1.16 billion, compared to $1.13 billion for the year ago period.

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Cintas Corp. also reported its full year financial results including an increase in net income to $374.4 million, or $3.05 per share versus $31.5 million, or 26 cents per share for the 2013 fiscal year.

Cintas 2014 full year net income spiked after the company closed a deal with the privately held Shred-It International Inc. to combine their document shredding businesses. 

Revenue for the 2014 fiscal year was $4.55 billion, compared to $4.32 billion for the 2013 full year.

TheStreet Ratings team rates CINTAS CORP as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

"We rate CINTAS CORP (CTAS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CTAS's revenue growth has slightly outpaced the industry average of 4.4%. Since the same quarter one year prior, revenues slightly increased by 5.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The current debt-to-equity ratio, 0.58, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, CTAS has a quick ratio of 1.60, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Commercial Services & Supplies industry and the overall market, CINTAS CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • 46.16% is the gross profit margin for CINTAS CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 7.48% is above that of the industry average.
  • You can view the full analysis from the report here: CTAS Ratings Report
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