Cintas Corporation (NASDAQ:CTAS): Has Recent Earnings Growth Beaten Long-Term Trend?
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Assessing Cintas Corporation's (NASDAQ:CTAS) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess CTAS's recent performance announced on 28 February 2019 and evaluate these figures to its longer term trend and industry movements.
See our latest analysis for Cintas
Commentary On CTAS's Past Performance
CTAS's trailing twelve-month earnings (from 28 February 2019) of US$836m has jumped 26% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 19%, indicating the rate at which CTAS is growing has accelerated. How has it been able to do this? Let's take a look at whether it is solely because of industry tailwinds, or if Cintas has experienced some company-specific growth.
In terms of returns from investment, Cintas has invested its equity funds well leading to a 27% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 13% exceeds the US Commercial Services industry of 6.5%, indicating Cintas has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Cintas’s debt level, has declined over the past 3 years from 22% to 18%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 58% to 87% over the past 5 years.
What does this mean?
Though Cintas's past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Cintas gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Cintas to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for CTAS’s future growth? Take a look at our free research report of analyst consensus for CTAS’s outlook.
Financial Health: Are CTAS’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 28 February 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
