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Reasons to Add Cintas (CTAS) Stock to Your Portfolio Now

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Cintas Corporation (CTAS - Free Report) is well poised for growth, courtesy of strength across its business, strategic acquisitions, focus on improving the product line and operational excellence.

The company remains focused on investing in growth opportunities and solidifying its long-term market position.

Zacks Investment Research
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CTAS has a market capitalization of $78.1 billion. Over the past year, it has gained 59.4% compared with the industry’s 56.1% growth. CTAS currently carries a Zacks Rank #2 (Buy).

Let’s delve into the factors that have been aiding the firm for a while now.

Business Strength: Cintas has been experiencing strength in its Uniform Rental and Facility Services segment, driven by growth in its customer base and introduction of additional products and services to existing customers. The segment’s revenues rose 7.8% year over year in the fourth quarter of fiscal 2024 (ended May 2024). 

Strong demand for its products and services, pricing actions and solid customer retention have been boosting the First Aid and Safety Services segment’s performance. Revenues from the segment climbed 11.2% year over year in the fiscal fourth quarter.

Given the strength across its businesses, management expects revenues to be in the range of $10.16-$10.31 billion in fiscal 2025, indicating growth of 6.5% at the midpoint from the year-ago level.

Acquisition Benefits: The company remains focused on acquiring businesses to gain access to new customers and product lines. CTAS’ acquisition of Paris Uniform Services (in March 2024) boosted its presence in Pennsylvania, New York, Maryland and West Virginia. Also, the buyout of SITEX (in February 2024) has strengthened its market position in the central Midwest region. In fiscal 2024, acquisitions boosted revenue growth by 0.4%.

Business Initiatives: Cintas’ focus on strengthening its product portfolio, along with investments in technology and existing facilities, should continue to drive its performance. Also, its focus on operational executions and pricing actions is helping it to maintain a healthy margin. For instance, in the fiscal fourth quarter, its gross margin increased 150 basis points year over year to 49.2%.

Shareholder-Friendly Policies: It remains committed to rewarding its shareholders through dividend payouts and share buybacks. In fiscal 2024, it paid dividends of $530.9 million and repurchased shares worth $700 million. Also, the company hiked its quarterly dividend by 15.6% to $1.56 per share in July 2024.

Other Promising Stocks

We have highlighted three other top-ranked stocks from the Zacks Industrial Products sector, namely Flowserve Corporation (FLS - Free Report) , Enersys (ENS - Free Report) and Zurn Elkay Water Solutions Corporation (ZWS - Free Report) , each carrying a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Flowserve delivered a trailing four-quarter average earnings surprise of 18.2%. In the past 60 days, the Zacks Consensus Estimate for 2024 earnings has increased 3.4%.

Enersys delivered a trailing four-quarter average earnings surprise of 1.5%. In the past 60 days, the consensus estimate for 2024 earnings has increased 2.6%.

Zurn Elkay delivered a trailing four-quarter average earnings surprise of 8.7%. In the past 60 days, the Zacks Consensus Estimate for 2024 earnings has increased 2.5%.

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