Cintas Corporation, a provider of business support services equipment, announced that it will implement a 1-for-4 stock split on September 11th. As of September 4th, record shareholders For each existing share you hold, you will receive three new shares. Based on current price levels, the stock split will bring the price down to just under $200 per share.
Despite the upcoming stock split, Baird analyst Andrew Whitman believes the company’s shares are overvalued with limited upside potential at current valuation levels. Whitman rates CTAS shares Neutral with a $775 price target, suggesting the shares will remain range-bound for the time being. “To be clear, I have no fundamental concerns about CTAS’s model/value proposition, execution quality, or the myriad benefits that accrue from its scale advantages,” Whitman said.
Additionally, the labor market is showing signs of softening and while our competitors have highlighted some increased competition, these are also not of major concern to us.”
“Ultimately, I hope to have another opportunity to recommend CTAS, but I believe the stock price has not priced in much of the good news at this point,” he added.
Wall Street’s overall stance on Cintas is a Moderate Buy consensus based on 16 analyst reviews (7 Buys, 7 Holds, and 2 Sells). However, with the current trading price of $802 and an average target price of $769, analysts are predicting a possible downside of 4% from current levels.
Cintas Stock Split and Valuation Analysis
Cintas recently reported strong revenue of $9.6 billion for the fiscal year ending May 31. The company also has a brighter outlook for fiscal 2025, expecting revenue to be in the range of $10.16 billion to $10.31 billion, a 6.6% increase year over year at the midpoint. EPS for fiscal 2025 is expected to be in the range of $16.25 to $16.75.
In addition to a bright earnings outlook, Cintas recently raised its dividend by more than 15%. While the dividend yield is low at less than 1%, the current dividend of $1.56 per common share works out to $6.24 per year. The increased dividend was paid on September 3rd.
Cintas operates throughout the United States and Canada and boasts over 1 million business customers. The company has 12 distribution centers and operates over 11,700 delivery routes. Based in Ohio, Cintas has been in business for over 90 years and is one of the largest companies in its industry.
