Shares of Cintas Corporation (CTAS) fell 1.8% to close at $428.89 on Wednesday after the provider of corporate identity uniforms through rental and sales programs posted disappointing Fiscal 2022 earnings guidance. Meanwhile, the company reported upbeat fiscal second-quarter 2022 results (ended November 30).
Results in Detail
Cintas reported earnings of $2.76 per share, beating the consensus estimate of $2.64. The company reported adjusted earnings of $2.37 per share in the same quarter last year.
Total revenue of $1.92 billion grew 9.4% year-over-year and topped analysts’ expectations of $1.9 billion.
Gross margin came in at 46%, down 70 basis points year-over-year on the back of higher labor and energy-related expenses.
Outlook
In response to encouraging results, Cintas CEO Todd M. Schneider updated the guidance.
For Fiscal 2022, total revenue is forecast in the range of $7.63 billion to $7.70 billion, up from the prior expectations of $7.58 billion to $7.67 billion. The consensus estimate is pegged at $7.65 billion.
Additionally, earnings are projected in a range of $10.70 to $10.95 per share, up from the prior range of $10.60 to $10.90 per share. However, earnings guidance is below analysts’ expectations of $10.97 per share.
“Guidance assumes an uneven economic recovery caused by COVID-19. However, guidance does not contemplate significant COVID-19 pandemic-related setbacks such as stay-at-home orders or costs necessary to comply with government COVID-19 mandates,” Schneider added.
Wall Street’s Take
The rest of the Street is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 3 Buys and 3 Holds. The average Cintas price target of $415.17 implies 3.2% downside potential. Shares have gained 26.4% over the past year.
News Sentiment
News Sentiment for Cintas is Neutral based on 10 articles over the past seven days. 50% of the articles have a Bullish sentiment on CTAS stock, compared to a sector average of 61%, while 50% of the articles are bearish, compared to a sector average of 39%.
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