The board of directors of leading business services provider Cintas Corporation (CTAS) recently approved a plan to increase its share repurchase program by an additional $500 million. The increased share repurchase authorization doubles the total share buyback program of the company to a cumulative tally of $1 billion.
Under its existing $500 million share buyback program authorized in Jul 2013, Cintas bought 4.3 million shares to date, at an average price of $60.87 million for a total of $262.5 million. The company currently has about $237.5 million worth of shares available for repurchase under its existing program.
With the additional share repurchase authorization, Cintas presently has $737.5 million worth of shares available for buyback. Management has not set any expiration date for the share repurchase program, which is likely to be continued at their discretion to reward shareholders with risk-adjusted returns.
Cintas has a strong balance sheet with adequate liquidity to meet its working capital requirements. The company also generates strong operating cash flow, which helps maintain its cash reserves. The company has consistently returned cash to shareholders through stable dividend payouts and share repurchases. In addition, Cintas has easy access to commercial paper and long-term debt markets on favorable interest rate and other terms, which has historically provided it with rich sources of liquidity. All these factors bode well for the financial stability and expansion plans of the company.
Cintas provides specialized services to businesses of all types throughout North America. The company designs, manufactures, implements corporate identity uniform programs, and provides entrance mats, restroom supplies, promotional products and first aid and safety products for diversified businesses. Cintas operates under two operating segments, Rental Uniforms and Ancillary Products, and Other Services. It continues to deliver organic growth through superior execution of its operational plans.
Cintas currently has a Zacks Rank #1 (Strong Buy). Other stocks that look promising in the industry and are worth a look now include Franklin Covey Co. (FC), The Hackett Group, Inc. (HCKT) and Stantec Inc. (STN), each carrying a Zacks Rank #2 (Buy).
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