Cintas Corp (NASDAQ:CTAS) Passes the "Caviar Cruise" Quality Investing Screen

For investors aiming to assemble a portfolio of durable, high-achieving companies for the future, the quality investing method provides a structured system. This strategy concentrates on finding businesses with lasting competitive strengths, sound financial condition, and a demonstrated history of producing high returns on capital. The "Caviar Cruise" stock screen, based on ideas from quality investing, uses a set of strict filters to find these companies. It searches for firms with steady revenue and profit expansion, high and bettering returns on invested capital (ROIC), solid free cash flow production, and a reasonable amount of debt. The aim is not to locate temporary discounts, but to discover outstanding businesses deserving of lasting ownership.

One company that now meets this strict screen is Cintas Corp (NASDAQ:CTAS), a top provider of corporate identity uniforms, facility services, and first aid & safety products. The screen's filters point out several main attributes that match the central ideas of quality investing.

Matching the Central Quality Investing Standards

The Caviar Cruise screen is constructed on measurable foundations of business superiority. Cintas's financial picture shows a solid match across these important measures:

• Continued Expansion: The screen demands a minimum 5% compound annual growth rate (CAGR) for both revenue and EBIT (earnings before interest and taxes) over five years. Cintas easily surpasses this, with a 5-year revenue CAGR of 8.2% and a more notable EBIT CAGR of 14.4%. Significantly, EBIT expansion exceeding revenue expansion, as seen here, signals pricing strength and operational effectiveness, showing the company is growing more profitable as it gets larger.

• Superior Capital Use: Possibly the most important filter for quality investors is a high Return on Invested Capital (ROIC), which gauges how well a company produces profits from its capital base. The screen requires an ROIC (leaving out cash, goodwill, and intangibles) over 15%. Cintas's number of 48.6% is superior, putting it in the highest group of its industry. This shows management has a confirmed history of using capital at very profitable levels, building major value for shareholders.

• Financial Stability and Cash Flow Soundness: Quality companies are not weighed down by debt and produce strong, sound earnings. The screen selects for a Debt-to-Free Cash Flow ratio under 5, meaning it would take fewer than five years of present cash flow to pay off all debt. Cintas's ratio of 1.67 shows a very strong balance sheet. Also, the "Profit Quality" measure, which compares free cash flow to net income, averages 102.5% over five years for Cintas, passing the 75% screen limit. This means the company's reported profits are completely turned into real, spendable cash, a mark of earnings reliability and financial soundness.

A Top-Level Fundamental Look

An examination of Cintas's detailed fundamental analysis report supports the screen's conclusions. The company receives high marks for Profitability (10/10) and Financial Health (8/10), backed by industry-best margins and solvency ratios. Its Growth (6/10) score shows a stable past and positive analyst forecasts for continued growth.

The main point of care, typical for many high-quality businesses, is in Valuation (2/10). The stock sells at high earnings multiples, showing the market's acknowledgment of its lasting business model and steady results. For the quality investor, the choice often depends on whether the company's better qualities warrant paying a higher price for ownership.

The Quality Investment Case for Cintas

Beyond the figures, Cintas displays several non-quantitative features valued by quality investors. Its business model, providing necessary, repeating services like uniform rentals and safety supplies, builds a stable income flow with high customer loyalty. This leads to major competitive benefits through scale, route density, and long-term client partnerships. The company works in a divided market, allowing for steady market share increases through internal growth and planned purchases. Management has shown careful capital use, regularly giving cash back to shareholders via dividends and buybacks while keeping a clean balance sheet.

Finding Other Quality Possibilities

Cintas Corp acts as a clear example of the kind of company the Caviar Cruise screen is made to find. For investors wanting to use this method to locate other possible quality holdings, the screen settings are open to the public. You can see the present screen setup and its outcomes by using this link: [Caviar Cruise Quality Stock Screen](https://www.chartmill.com/stock/stock-screener?sid=673&f=sl_rev5y_5_X,sl_roicNg_15_X,sl_debt2fcf_X_5,sl_profitQ5y_75_X,sl_ebit5yGrowth_5_X,exch_us&v=22&s=ta&sd=DESC&cpl=2&bc=false&nw=1&o1=3&op1=200,16711680&o2=3&op2=50,255&o3=1&cf=(ebit5yGrowth%3Erev5y)>.

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Disclaimer: This article is for information only and is not financial guidance, a suggestion, or an offer to buy or sell any security. The data shown is from public information and particular screening rules. Investors must perform their own complete investigation and think about their personal money situation and risk comfort before making any investment choices.