Cintas (CTAS) Up 1% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Cintas reported strong Q1 fiscal 2025 earnings and revenues, surpassing estimates, with a positive outlook for the fiscal year despite a recent downward trend in estimates [2][9]. Financial Performance - Q1 fiscal 2025 earnings were $1.10 per share, exceeding the Zacks Consensus Estimate of $1.00, marking an 18.3% year-over-year increase [2]. - Total revenues reached $2.502 billion, slightly above the consensus estimate of $2.497 billion, reflecting a 6.8% year-over-year growth driven by higher segmental revenues [2]. - Organic sales increased by 8% year over year [2]. Segmental Results - Uniform Rental and Facility Services segment generated $1.93 billion in revenues, up 5.9% year over year, accounting for 77.3% of total net sales [3]. - First Aid and Safety Services segment reported revenues of $292.6 million, a 12.2% increase year over year, representing 11.7% of total net sales [3]. - Other businesses, categorized as All Other, generated $275.2 million, up 8% year over year, making up 11% of total net sales [3]. Margin Profile - Cost of sales increased by 4.1% year over year to $1.25 billion, representing approximately 49.9% of net sales [4]. - Gross profit rose by 9.6% to $1.25 billion, with a gross margin of 50.1%, compared to 48.7% in the previous year [4]. - Operating income increased by 12.1% year over year to $561 million, with an operating margin of 22.4% [4]. Balance Sheet & Cash Flow - Cash and cash equivalents at the end of Q1 fiscal 2025 were $101.4 million, up from $88.1 million a year ago [5]. - Long-term debt decreased to approximately $2.03 billion from $2.48 billion [5]. - Net cash generated from operating activities was $466.7 million, a 38.5% increase year over year, while free cash flow rose by 62.4% to $373.8 million [5]. FY25 Guidance - Cintas expects revenues for fiscal 2025 to be between $10.22 billion and $10.32 billion, an increase from the previous guidance of $10.16 billion to $10.31 billion [5]. - Earnings per share are projected to be in the range of $4.17 to $4.25, up from the earlier estimate of $4.06 to $4.19 [5]. Estimates Movement - There has been a downward trend in estimates for Cintas over the past month, although the magnitude of these revisions has been net zero [7][9]. VGM Scores - Cintas holds a Growth Score of A but lags in Momentum Score with a C, and has a Value Score of D, placing it in the bottom 40% for this investment strategy [8].