Reasons to Retain Cintas (CTAS) Stock in Your Portfolio Now
Cintas Corporation CTAS is gaining from strong segmental performances and its focus on the enhancement of its product portfolio despite the adverse impacts of high costs and forex woes.
Let us discuss the reasons why investors should retain the stock for the time being.
Growth Catalysts
Business Strength: Strong segmental performances are aiding Cintas’ top line (up 8.1% year over year in the first three months of fiscal 2024, which ended August 2023). Its Uniform Rental and Facility Services segment is benefiting from strong demand from the health care, education and government verticals. The segment’s revenues rose 7.6% year over year in the first three months of fiscal 2024. High customer retention levels are boosting the First Aid and Safety Services segment’s performance. Revenues from the segment climbed 11.3% year over year in the first three months of fiscal 2024.
Enhancement of Product Portfolio: The company’s focus on the enhancement of its product portfolio, along with investments in technology and existing facilities, may drive its performance in the near term. Also, CTAS’ focus on operational executions and pricing actions is helping it maintain healthy margin performance. For instance, in the first three months of fiscal 2024, the gross margin increased 120 basis points to 48.7% from the year-ago reported number.
Rewards to Shareholders: CTAS continues to increase shareholders’ value through dividend payments & share repurchases. In the first three months of fiscal 2024, the company paid dividends worth $117.6 million, up approximately 20.4% year over year. Cintas repurchased shares worth $73.3 million in the same period. The company hiked its quarterly dividend by 17.4% to $1.35 per share in July 2023. It is worth noting that Cintas has consistently raised its dividend for 40 straight years.
In light of the above-mentioned positives, we believe investors should retain CTAS stock for now, as suggested by its current Zacks Rank #3 (Hold). Shares of the company gained 20.7% in a year compared with the industry‘s 18.8% increase.
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Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
Flowserve Corporation FLS presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
FLS delivered a trailing four-quarter average earnings surprise of 27.3%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2023 earnings has increased 2.5%. The stock has risen 33.9% in the past year.
Applied Industrial Technologies, Inc. AIT presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 13.9%.
The consensus estimate for AIT’s fiscal 2024 earnings has increased 3.3% in the past 60 days. Shares of Applied Industrial have rallied 36.9% in the past year.
A. O. Smith Corporation AOS currently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 14%.
In the past 60 days, the consensus estimate for A. O. Smith’s 2023 earnings has improved 4.7%. The stock has risen 41.3% in the past year.
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A. O. Smith Corporation (AOS) : Free Stock Analysis Report
Flowserve Corporation (FLS) : Free Stock Analysis Report
Cintas Corporation (CTAS) : Free Stock Analysis Report
Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report
