Please ensure Javascript is enabled for purposes of website accessibility

Why Cintas Stock Jumped Today

By Anders Bylund – May 14, 2020 at 12:50PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The leading provider of corporate uniforms, safety measures, and sanitation services offered a COVID-19 update that impressed both analysts and investors.

What happened

Shares of Cintas (CTAS) were trading 10.2% higher at noon, EDT. The provider of corporate uniforms, cleaning services, and worker safety measures held a call on Wednesday to update investors on the business impact of the COVID-19 pandemic. Analysts walked away impressed and filed a number of price target increases on Thursday morning.

So what

RBC Capital raised his target price on Cintas from $220 to $250 per share. The business update was "better than feared" in RBC analyst Seth Weber's view, and the company seems poised to benefit from a global focus on keeping workplaces safe, healthy, and sanitary.

Analyst Kevin McVeigh from Credit Swiss lifted his price target from $200 to $205 per share, noting that the bulk of Cintas' revenue decline appears to have landed in April and early May.

On the call, Cintas said that fourth-quarter revenues should land near $1.55 billion. Management declined to offer profit margin or bottom-line targets due to the uncertainty of the COVID-19 situation.

Close-up photo of a female doctor wearing a safety mask with two other doctors in the blurred background.

Image source: Getty Images.

Now what

Some customers have closed down their day-to-day operations or moved their businesses into work-from-home setups, reducing their need for Cintas' services. For others, this company plays an active role in the fight against coronavirus infections. Cintas provides personal protection equipment, disinfecting sprays and hand sanitizers, and uniform laundry services to keep the virus at bay.

"The last 55 days have been a very challenging period and we're not through it yet," said CEO Scott Farmer. "However, there are encouraging signs with the discussions of reopening the economy. We remain excited about the future of Cintas and our opportunity to help businesses get ready for the workday."

Cintas' stock closed Wednesday's trading at $199.47 per share. The stock is trading at 21 times free cash flows today, 43% below February's all-time highs. Last year was a great one for Cintas, and the stock is trading just 9% lower from a 52-week perspective.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool recommends Cintas. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Cintas Stock Quote

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.