Shares of Cintas (CTAS 0.15%) rose 60.2% in 2019, according to data from S&P Global Market Intelligence. The leading provider of corporate uniforms and related services executed this climb the old-fashioned way: by beating Wall Street's earnings estimates in each one of the year's earnings reports.
The earnings beats ranged from a 7% surprise in March's fiscal third-quarter report to a 12% outperformance in the year-ending Q2 update. Revenue rose 7% in the second quarter, while earnings increased 29% compared to the year-ago period. That period reaped the benefit of an unusually large cohort uniform order from an unnamed Fortune 100 customer, but Cintas' business is humming even in quarters without outsize mega-orders. The 2017 buyout of uniform services peer G&K Services unlocked a plethora of cost-saving synergies, which Cintas is using to drive its bottom-line earnings higher.
This is one of those simple business models that a ham sandwich could run, but this sandwich would probably settle for slow and stable long-term growth. Cintas' actual management team is doing much better, aiming to expand its uniform market into previously unserved niches. The underlying strategy is a relentless focus on providing high-quality products and services that its industry rivals often cannot match at a reasonable price.
Management expects revenue growth of approximately 6% for full-year fiscal 2020, which ends in May. Earnings should increase by roughly 15%. It's no surprise to see investors rewarding Cintas for running a predictably excellent uniform rentals business.