CINTAS CORP (NASDAQ:CTAS) – A Quality Stock with Strong Fundamentals

CINTAS CORP (NASDAQ:CTAS) was identified as a strong candidate for quality investors through our Caviar Cruise stock screener. The company demonstrates consistent growth, high profitability, and solid financial health, making it a compelling option for long-term investors. Below, we examine why CTAS meets the criteria for quality investing.

Key Strengths of CINTAS CORP

• Revenue & EBIT Growth: Over the past five years, CTAS has delivered a revenue growth CAGR of 7.67% and an EBIT growth CAGR of 12.5%, indicating improving operational efficiency.
• High Return on Invested Capital (ROIC): With an ROIC (excluding cash and goodwill) of 51.32%, the company generates exceptional returns on capital deployed, well above the 15% threshold for quality stocks.
• Strong Profit Quality: CTAS converts net income into free cash flow efficiently, with a five-year average profit quality of 107.82%, reflecting reliable earnings.
• Low Debt Burden: The company’s debt-to-free cash flow ratio stands at 1.36, meaning it could repay all debt in just over a year using current cash flows.

Fundamental Analysis Summary

Our fundamental report assigns CTAS a score of 6 out of 10, with standout performance in profitability and financial health. Key highlights include:

• Profitability: High margins (Operating Margin of 22.77%, Profit Margin of 17.47%) and industry-leading ROIC.
• Financial Health: Strong solvency metrics, including a low Debt/Equity ratio (0.44) and an Altman-Z score of 14.43, signaling minimal bankruptcy risk.
• Valuation: Currently priced at a premium (P/E of 51.46), but justified by strong growth prospects and profitability.

For investors seeking stable, high-quality businesses, CTAS presents a well-rounded profile.

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Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should conduct your own analysis before making investment decisions.