Cintas Corporation, a provider of support services equipment for businesses, has announced a 4-for-1 stock split set to take effect on September 11. As of September 4, record shareholders will receive three new shares for each existing share they hold. Based on current pricing levels, the split will bring the share price down to slightly less than $200 each.
Despite the upcoming split, Baird analyst Andrew Wittmann believes the stock is overvalued and sees limited upside at present valuation levels. Wittmann rates CTAS shares Neutral, with a price target of $775, suggesting the shares will stay rangebound for now. Wittmann stated, “We want to be clear: We do not have any fundamental concerns about CTAS’ model/value proposition, execution quality, or any of the myriad of benefits which stem from its scale advantage.
Moreover, while the labor market appears to have shown some signs of softening, and competitors have highlighted a degree of increased competition, even these are not overly concerning to us.”
He added, “Net, we’re hopeful we’ll get another shot to recommend CTAS, but for now, we believe shares discount most of the good news.
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 a current trading price of $802 and an average price target of $769, analysts project a potential decline of 4% from current levels.
Cintas stock split and valuation analysis
Cintas recently reported strong earnings for the fiscal year ended May 31, with revenues of $9.6 billion. The company also gave an upbeat outlook for fiscal 2025, guiding revenue in the range of $10.16 billion to $10.31 billion, representing a 6.6% year-over-year gain at the midpoint. EPS for fiscal 2025 is guided in the range of $16.25 to $16.75.
In addition to the positive earnings outlook, Cintas recently raised its dividend by more than 15%. While the dividend yield is low at less than 1%, the current payment of $1.56 per common share annualizes to $6.24. The higher dividend was paid on September 3.
Cintas operates across the US and Canada, boasting more than 1 million enterprise customers. The company has 12 distribution centers and operates more than 11,700 distribution routes. Based in Ohio, Cintas has been in operation for more than 90 years and is one of the largest firms in its industry.
