Cintas Corporation CTAS is well-poised to benefit from strength across its business, acquisitions, focus on improving the product line and operational excellence. The company remains focused on investing in growth opportunities and solidifying its long-term market position.

CTAS, which has a market capitalization of $89.4 billion, currently carries a Zacks Rank #2 (Buy). Let’s delve into the factors that have been aiding the firm for a while now.

Business Strength: Cintas has been experiencing strong momentum in its Uniform Rental and Facility Services segment, driven by strong growth in new customers and penetration of additional products and services into existing customers. The segment’s revenues rose 5.9% year over year in the first quarter of fiscal 2025 (ended August 2024).

Increasing demand for AED Rentals, eyewash stations and WaterBreak products is boosting the First Aid and Safety Services segment’s performance. Also, an improved sales mix bodes well for the segment. Revenues from the segment climbed 12.2% year over year in the fiscal first quarter.

Driven by strength across its businesses, Cintas has provided a bullish forecast for fiscal 2025. The company expects revenues to be in the range of $10.22-$10.32 billion, higher than the earlier predicted band of $10.16-$10.31 billion.

Acquisition Benefits: The company remains focused on acquiring businesses to gain access to new customers and product lines. CTAS’ acquisition of Paris Uniform Services (in March 2024) boosted its presence in Pennsylvania, New York, Maryland and West Virginia. Also, the buyout of SITEX (in February 2024) has strengthened its market position in the central Midwest region. In fiscal 2024 (ended May 2024), acquisitions boosted revenue growth by 0.4%.

YTD Price Performance of CTAS

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In the year-to-date period, it has gained 47.2% compared with the industry’s 45.2% growth.

Business Initiatives: Cintas’ focus on strengthening its product portfolio, along with investments in technology and existing facilities, should continue to drive its performance. For instance, the company’s investment in SmartTruck technology continues to provide route optimization and improved efficiencies.

Also, the company has been investing in garment-sharing technology and SAP systems for a while now. In addition, CTAS has partnered with Verizon and Google to deploy technology solutions, thereby providing its employees with the insights necessary to deliver a more personalized customer experience.

Shareholder-Friendly Policies: It remains committed to rewarding its shareholders through dividend payouts and share buybacks. In the first three months of fiscal 2025, the company paid dividends worth $138.2 million, up approximately 17.5% year over year. The amount spent on share buybacks totaled $614.8 million compared with $73.3 million in the year-ago period.

Also, in fiscal 2024, dividend payments totaled $530.9 million, up 18% year over year. Cintas repurchased shares worth $700 million in the same period, up 75.5% year over year.

Other Stocks to Consider

Other top-ranked companies are discussed below.

Graham Corporation GHM currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

GHM delivered a trailing four-quarter average earnings surprise of 101.9%. In the past 60 days, the Zacks Consensus Estimate for Graham’s 2024 earnings has increased 8.4%.

RBC Bearings RBC presently has a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 2.5%.

In the past 60 days, the Zacks Consensus Estimate for RBC’s fiscal 2025 (ending March 2025) earnings has increased 2.3%.

Kadant Inc. KAI currently carries a Zacks Rank of 2. KAI delivered a trailing four-quarter average earnings surprise of 17.2%.

In the past 60 days, the consensus estimate for Kadant’s 2024 earnings has increased 1.8%.

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