It has been about a month since the last earnings report for Cintas (CTAS). Shares have added about 13.3% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Cintas due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.
Cintas’ Q1 Earnings & Revenues Beat Estimates on Margin Gains
Cintas reported first-quarter fiscal 2027 adjusted earnings of $1.39 per share, which beat the Zacks Consensus Estimate of $1.35 by 3.0%. The bottom line increased 15.8% from the year-ago quarter. Revenues of $3.01 billion surpassed the consensus estimate of $2.97 billion by 1.6% and rose 10.9% year over year.
The top line benefited from 8.9% organic revenue growth, reflecting growth after adjusting for acquisitions, foreign currency movements and workday differences. Record gross and operating margins were other key highlights in the quarter.
Cintas' Segmental Results
The company has two reportable segments, Uniform Rental and Facility Services and First Aid and Safety Services. Other businesses are included in All Other. Quarterly sales data are briefly discussed below.
Cintas' Uniform Rental and Facility Services segment generated revenues of $2.29 billion, up 9.7% year over year from $2.09 billion. Segment operating income rose to $575.09 million from $499.94 million.
The First Aid and Safety Services segment delivered revenues of $388.52 million, increasing 16.1% from $334.66 million in the prior-year quarter. Operating income climbed to $99.54 million from $80.33 million.
Revenues from the All Other segment totaled $330.73 million, up 13.1% from $292.40 million a year ago. Segment operating income increased to $51.67 million from $37.60 million.
Margin Profile
Cintas' cost of sales totaled $1.46 billion compared with $1.35 billion in the year-ago quarter. Gross margin increased 13.7% to $1.55 billion, while gross margin as a percentage of revenue expanded to 51.5% from 50.3%.
Selling and administrative expenses were $827.24 million, up 10.5% year over year. The company also incurred $14.41 million of transaction expenses related to the proposed UniFirst Corporation acquisition. Operating income rose 15.2% to $711.89 million.
Operating margin improved to 23.6% from 22.7% in the prior-year quarter. Net income increased 12.3% to $551.71 million, while net income margin was 18.3% compared with 18.1%. The effective tax rate increased to 20.0% from 17.6%.
Cintas' Cash Flow Trends
In the first quarter of fiscal 2027, Cintas generated $572.33 million in net cash from operating activities, up from $414.48 million in the year-ago period. Capital expenditures totaled $107.53 million compared with $101.96 million a year earlier.
Free cash flow increased to $464.80 million from $312.52 million. Net cash used in investing activities was $117.37 million, reflecting capital expenditures, purchases of investments and business acquisitions.
During the quarter, the company repurchased common stock worth $315.71 million and paid $180.70 million in dividends. Net cash used in financing activities totaled $500.17 million.
Balance Sheet
Cintas exited the quarter with cash and cash equivalents of $243.60 million compared with $289.02 million at the end of fiscal 2026. Accounts receivable increased to $1.59 billion from $1.56 billion, while inventories declined to $433.29 million from $446.44 million.
Total current assets were $3.93 billion compared with $3.85 billion at May 31, 2026. Long-term debt was $1.43 billion, while debt due within one year totaled $999.29 million. Total shareholders' equity increased to $5.20 billion from $5.14 billion.
Cintas' Fiscal 2027 Outlook
For fiscal 2027, the company raised its revenue guidance to $12.15-$12.27 billion from the prior projection of $12.10-$12.25 billion. Adjusted diluted earnings per share are now projected in the range of $5.45-$5.54, up from $5.36-$5.50 previously.
The guidance excludes expected impacts from the proposed UniFirst acquisition and assumes no future acquisitions and constant foreign exchange rates. Fiscal 2027 also has one more workday than fiscal 2026.
Cintas expects net interest expense of approximately $103.00 million compared with $101.20 million in fiscal 2026, with the increase primarily tied to amortization of bridge loan financing expenses related to UniFirst. The company projects an effective tax rate of 20.4% for fiscal 2027.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in estimates revision.
VGM Scores
At this time, Cintas has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock has a score of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Cintas has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Cintas Corporation (CTAS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).