Cintas (CTAS)

Uniform and facility services provider Cintas (NASDAQ:CTAS) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 8.7% year on year to $2.72 billion. On the other hand, the company’s full-year revenue guidance of $11.12 million at the midpoint came in 99.9% below analysts’ estimates. Its GAAP profit of $1.20 per share was in line with analysts’ consensus estimates.

Company Overview

Starting as a family business collecting and cleaning shop rags in Cincinnati, Cintas (NASDAQ:CTAS) provides corporate identity uniforms, facility services, and safety products to over one million businesses across North America.

Growing regulatory pressure on environmental compliance and increasing corporate ESG commitments should buoy the sector for years to come. On the other hand, environmental regulations continue to evolve, and this may require costly upgrades, volatility in commodity waste and recycling markets, and labor shortages in industrial services. As for digitization, a theme that is impacting nearly every industry, the increasing use of data, analytics, and automation will give rise to improved efficiency of operations. Conversely, though, the benefits of digitization also come with challenges of integrating new technologies into legacy systems.

Cintas competes with Aramark (NYSE:ARMK), UniFirst (NYSE:UNF), and G&K Services in the uniform rental space, while facing competition from Grainger (NYSE:GWW) and MSC Industrial (NYSE:MSM) in safety supplies, and Johnson Controls (NYSE:JCI) in fire protection services.

A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.

With $10.56 billion in revenue over the past 12 months, Cintas is one of the larger companies in the business services industry and benefits from a well-known brand that influences purchasing decisions.

As you can see below, Cintas’s sales grew at a solid 8.5% compounded annual growth rate over the last five years. This is a good starting point for our analysis because it shows Cintas’s demand was higher than many business services companies.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Cintas’s annualized revenue growth of 8.4% over the last two years aligns with its five-year trend, suggesting its demand was predictably strong.

This quarter, Cintas reported year-on-year revenue growth of 8.7%, and its $2.72 billion of revenue exceeded Wall Street’s estimates by 0.9%.

Looking ahead, sell-side analysts expect revenue to grow 7% over the next 12 months, similar to its two-year rate. We still think its growth trajectory is satisfactory given its scale and indicates the market is forecasting success for its products and services.

Cintas has been a well-oiled machine over the last five years. It demonstrated elite profitability for a business services business, boasting an average operating margin of 21.2%.

Analyzing the trend in its profitability, Cintas’s operating margin rose by 3.2 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, Cintas generated an operating margin profit margin of 22.7%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Cintas’s EPS grew at an astounding 15.9% compounded annual growth rate over the last five years, higher than its 8.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Cintas’s earnings to better understand the drivers of its performance. As we mentioned earlier, Cintas’s operating margin was flat this quarter but expanded by 3.2 percentage points over the last five years. On top of that, its share count shrank by 4.5%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Cintas, its two-year annual EPS growth of 16.3% is similar to its five-year trend, implying strong and stable earnings power.

In Q3, Cintas reported EPS of $1.20, up from $1.10 in the same quarter last year. This print was close to analysts’ estimates. Over the next 12 months, Wall Street expects Cintas’s full-year EPS of $4.52 to grow 10.6%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Cintas has shown terrific cash profitability, enabling it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company’s free cash flow margin was among the best in the business services sector, averaging 16.2% over the last five years.

Cintas’s free cash flow clocked in at $312.5 million in Q3, equivalent to a 11.5% margin. The company’s cash profitability regressed as it was 3.4 percentage points lower than in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, causing temporary swings. Long-term trends are more important.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Cintas’s five-year average ROIC was 25.7%, placing it among the best business services companies. This illustrates its management team’s ability to invest in highly profitable ventures and produce tangible results for shareholders.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Cintas’s ROIC averaged 3 percentage point increases each year. This is a great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.

Cintas reported $138.1 million of cash and $2.68 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $2.90 billion of EBITDA over the last 12 months, we view Cintas’s 0.9× net-debt-to-EBITDA ratio as safe. We also see its $93.11 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see Cintas narrowly top analysts’ revenue expectations this quarter. On the other hand, its full-year revenue guidance missed and its full-year EPS guidance fell slightly short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 3.3% to $194 immediately after reporting.

Updated: December 4, 2025 at 10:56 PM EST

A common mistake we notice when investors are deciding whether to buy a stock or not is that they simply look at the latest earnings results. Business quality and valuation matter more, so we urge you to understand these dynamics as well.

There are multiple reasons why we think Cintas is an amazing business. For starters, its revenue growth was solid over the last five years. On top of that, its powerful free cash flow generation enables it to stay ahead of the competition through consistent reinvestment of profits, and its impressive operating margins show it has a highly efficient business model.

Cintas’s P/E ratio based on the next 12 months is 37.2x. Some good news is baked into the stock given its multiple, but we’ll happily own Cintas as its fundamentals really stand out. We’re in the camp that investments like this should be held for at least three to five years to negate the short-term price volatility that can come with relatively high valuations.

Wall Street analysts have a consensus one-year price target of $214.88 on the company (compared to the current share price of $183.85).