Let's talk about the popular Cintas Corporation (NASDAQ:CTAS). The company's shares saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$276 and falling to the lows of US$246. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Cintas's current trading price of US$256 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Cintas’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What is Cintas worth?
According to my valuation model, Cintas seems to be fairly priced at around 1.6% below my intrinsic value, which means if you buy Cintas today, you’d be paying a fair price for it. And if you believe that the stock is really worth $260.18, then there isn’t much room for the share price grow beyond what it’s currently trading. What's more, Cintas’s share price may be more stable over time (relative to the market), as indicated by its low beta.
Can we expect growth from Cintas?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 4.6% expected over the next year, growth doesn’t seem like a key driver for a buy decision for Cintas, at least in the short term.
What this means for you:
Are you a shareholder? CTAS’s future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on CTAS, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Cintas. You can find everything you need to know about Cintas in the latest infographic research report. If you are no longer interested in Cintas, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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 email@example.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.