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Cintas (CTAS) to Post Q2 Earnings: What's in the Offing?

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Zacks Equity Research
·4 min read
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Cintas Corporation CTAS is slated to report second-quarter fiscal 2021 (ended November 2020) results on Dec 22, before market open.

The company pulled off a positive earnings surprise of 14.17%, on average, in the preceding four quarters, surpassing estimates on all occasions. In first-quarter fiscal 2021 (ended August 2020), Cintas reported adjusted earnings of $2.78 per share, which surpassed the Zacks Consensus Estimate of $2.16 by 28.7%.

In the past three months, the company’s shares have gained 12.3% compared with the industry’s growth of 13.1%.

Factors to Influence Q2 Results

Cintas is anticipated to have gained from solid momentum in its First Aid and Safety Services segment, backed by strength across healthcare and hygiene end markets during the fiscal second quarter. Robust demand for its personal protective equipment, including face masks, gloves, sanitizers and other critical items, is likely to have driven its revenues. Also, the company’s Uniform Rental and Facility Services segment is likely to have benefited from improved demand environment supported by gradual reopening of majority of its customers’ businesses.

Also, strength across Cintas’ Doritex business (acquired in February 2020), which has been strengthening its offerings and customer reach across Buffalo and the surrounding Western New York region, is likely to have supported fiscal second-quarter revenues. In addition, its focus on expanding product portfolio and market share, along with its strong distribution network and sales force, might have aided it.

Moreover, some of the actions taken by Cintas, including several cost control measures and strengthening of supply-chain, are anticipated to have helped it to maintain a healthy margin performance in the to-be-reported quarter.

However, the overall challenging demand environment, on account of the coronavirus outbreak-led issues, is expected to have had a bearing on its top-line performance in the to-be-reported quarter. For the fiscal second quarter, the company expects revenues of $1.725-$1.750 billion, suggesting a decline of 5.1-6.5% from the year-ago reported figure.

The Zacks Consensus Estimate for fiscal second-quarter revenues for Uniform Rental and Facility Services is currently pegged at $1,412 million, indicating a decline of 3.9% from the year-ago reported number. Revenues for First Aid and Safety Services are pegged at $188 million, implying year-over-year growth of 10.6%. In addition, the consensus estimate for revenues for the All Other segment, which includes uniform direct sale and fire protection services businesses, currently stands at $157 million, suggesting a fall of 23%.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Cintas this season.

This is because a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or at least 3 (Hold) to increase the odds of an earnings beat. But that is not the case here as we will see below.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Cintas has an Earnings ESP of 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $2.18.

Cintas Corporation Price and EPS Surprise

Cintas Corporation Price and EPS Surprise
Cintas Corporation Price and EPS Surprise

Cintas Corporation price-eps-surprise | Cintas Corporation Quote

Zacks Rank: Cintas carries a Zacks Rank #2.

Key Picks

Here are a few companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

AGCO Corporation AGCO has an Earnings ESP of +6.85% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dover Corporation DOV has an Earnings ESP of +6.18% and a Zacks Rank #2.

Helios Technologies, Inc HLIO has an Earnings ESP of +3.03% and a Zacks Rank of 2.

5 Stocks Set to Double

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Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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