Leading uniform rental and business essentials provider Cintas (CTAS +1.68%) saw its shares jump 4% higher as of 10 a.m. ET on Thursday. Cintas is a 92-bagger since 1994 and kept the good times going, beating the market's expectations with its second-quarter earnings. Sales grew 9% during the quarter while earnings per share (EPS) increased 11%.
Perhaps most importantly, management raised its 2026 revenue guidance from $11.12 billion at the midpoint to $11.18 billion, along with boosting its EPS outlook from $4.8 to $4.84.
NASDAQ: CTAS
Key Data Points
Cintas: more of the same -- but that's good
Cintas may be the epitome of a boring, steady-Eddie compounder. Providing uniform rental solutions, business essentials such as mats, mops, and cleaning products, as well as fire and safety items, the company has steadily grown in a highly fragmented niche. Now serving over 100,000 customers across the U.S. and Canada, Cintas operates a logistical network of more than 12,000 routes, delivering its extensive range of products.
The company has grown sales and earnings in 54 of the last 56 years and looks well on its way to doing so after this quarter. Furthermore, despite facing a challenging macroeconomic environment with hiring being reined in across the country, Cintas' retention rates among its customers remain near all-time highs, according to Todd Schneider, the company's Chief Executive Officer. Powered by this strong retention -- paired with ongoing tuck-in acquisitions for new customers and continued cross-selling to existing clients -- Cintas remains an elite compounder.
Image source: Getty Images.
Sporting an 18% free cash flow (FCF) margin as its network continues to become more efficient, the company handsomely rewards its shareholders with stock buybacks and a growing dividend. Over the last decade, Cintas has reduced its share count by 1% annually, while its dividend payments have increased by roughly 20% each year.
Despite dropping 15% from its 52-week highs, however, Cintas still trades at 40 times forward earnings. Therefore, interested investors should consider adding to their position in small batches over time and plan to hold for at least three to five years.
