On Feb 26, Zacks Investment Research updated the research report on business services provider Cintas Corporation CTAS.
Cintas continued its bull run in fiscal 20Array6 by recording solid second-quarter results on the back of healthy top-line growth. The company reported second-quarter fiscal 20Array6 (ended Nov 30, 20Array5) net income of $ArrayArray5.5 million or $Array.03 per share from continuing operations compared with $Array03.7 million or 86 cents per share in the year-earlier quarter. Reported earnings for the quarter comfortably beat the Zacks Consensus Estimate by 3 cents.
Quarterly revenues increased 8.5% year over year to $Array,2Array9.Array million and exceeded the Zacks Consensus Estimate of $Array,2Array8 million. Organic growth for the reported quarter improved 6.5% year over year. The superior top-line performance was primarily attributable to the addition of newer customers, higher product prices and higher penetration of existing customers through better and innovative products and services.
Gross margin for the quarter was 43.3% compared with 42.9% in the prior-year quarter. Operating income in the reported quarter was $200.3 million, up Array0.3% year over year. Operating margin was Array6.4%, slightly higher than Array6.2% in the year-earlier quarter.
Cintas aims to continually achieve revenue build-up by increasing penetration levels at existing customers and broadening customer base to include business segments that are not historically served. For augmenting its long-term margins, Cintas is focusing more on its core competency areas by expanding its businesses across key regions. Additionally, the company’s newly introduced customized product range is successfully catering to the needs of its clients.
In addition, 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. We remain encouraged by such focused attempts of the company to maintain a steady growth curve.
Cintas currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader industry include Navigant Consulting Inc. NCI, Exponent Inc. EXPO and Franklin Covey Co. FC, each carrying a Zacks Rank #2 (Buy).
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