Business services provider Cintas Corporation CTAS recently modified its share repurchase program to enhance shareholder value. Under the new share repurchase program, the company has doubled its share authorization tally to enable the repurchase of an additional $500 million worth of stock over a period of time. The additional shares over its existing $500 million share repurchase authorization could be repurchased through a slew of open market transactions.
Cintas had authorized a $500 million share repurchase program in January this year. As of Aug 4, 2015, the company has repurchased 4.4 million shares at an average price of $83.82 for a total consideration of $370 million. Consequently, Cintas currently has a cumulative $630 million worth of share repurchase authorization left in its kitty.
Over the years, the company has consistently returned significant cash to its shareholders through dividends and share repurchases. The company’s investment strategy takes a holistic view of the rapidly evolving market and deploys a dynamic capital allocation approach to focus on the relative value of the various sectors within the broader industry.
Cintas has a strong balance sheet with adequate liquidity to meet its working capital requirements. Also, it generates strong operating cash flow which helps it to maintain cash reserves. In addition, Cintas has an 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.
Cintas provides specialized services to diversified businesses 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.
Cintas currently has a Zacks Rank #2 (Buy). Other stocks that look promising and are worth a look now include AirMedia Group Inc. AMCN, The Interpublic Group of Companies, Inc. IPG and Omnicom Group Inc OMC, each carrying the same Zacks Rank as Cintas.
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