CINTAS CORP. $85(Nasdaq symbol CTAS; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 111.7 million; Market cap: $9.5 billion; Price-to-sales ratio: 2.1; Dividend yield: 1.0%; TSINetwork Rating: Average; www.cintas.com) designs and makes uniforms, then sells them to over 900,000 businesses, mainly in North America. It also offers related products and services, like office cleaning and first aid kits.
Last year, the company sold its document-shredding operations to Toronto-based Shred-it International. In exchange, it received 42% of the combined firm and $180 million in cash. In May 2015, the company received a $113.4-million dividend from Shred-it.
Shred-it recently accepted a $2.3-billion takeover offer from Stericycle (Nasdaq symbol SRCL). As a result, Cintas will get between $550 million and $600 million for its stake. Stericycle expects to complete the purchase by the end of 2015.
Meanwhile, Cintas earned $396.9 million in its 2015 fiscal year, which ended May 31, 2015, up 17.5% from $337.8 million in 2014. Earnings per share gained 21.8%, to $3.35 from $2.75, on fewer shares outstanding. These figures exclude the document-shredding business and other unusual items. Revenue rose 6.7%, to $4.5 billion from $4.2 billion.
The company should earn $3.82 a share in fiscal 2016. The stock trades at a high, but still acceptable, 22.3 times the midpoint of that range. The $0.85 dividend yields 1.0%.
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