CTAS - Clean Finish to FY26... Raising FY27 Estimates

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CTAS - Clean Finish to FY26... Raising FY27 Estimates

Truist Securities

Company Description

Cintas Corporation (CTAS) is the largest provider of rental uniforms in North America with an estimated ~40% market share per our

estimates. Management diversified outside legacy strength in rental uniforms over the past 25 years, building leading positions in First Aid

& Safety and Fire Protection Services through a combination of acquisitions and organic growth. The company reports in four operating

segments: Uniform Rental & Facility Services (78% of revenue), First Aid & Safety Services (11% of revenue), Fire Protection Services

(8% of revenue) and Uniform Direct Sales (3% of revenue). Cintas services over a million businesses and operates one of the largest

vehicle fleets in North America. The company has a more diverse product suite than peers in the Rental Uniform space and has historically

outperformed industry growth rates. CTAS is headquartered in Mason, Ohio, is an S&P 500 component, and trades on the NASDAQ.

Investment Thesis

We believe Cintas is poised to drive mid-to-high single digit organic growth and incremental margins at the upper end of management's

25%-35% target over the next 2-3 years. Valuation is relatively rich, but we believe a premium multiple is merited relative to the route-

based peer group on: (1) high recurring revenue mix; (2) impressive revenue retention; and (3) prospects for accelerated capital return.

In our view, CTAS has one of the best business models in the Industrial Services sector. We rate the shares Buy.

Valuation and Risks

We value CTAS using the following metrics: (1) EV/EBITDA multiples; and (2) FCF/Share multiples.

EV/EBITDA Multiple Valuation: CTAS trades at a 24.0x EV/EBITDA multiple on our CY26 estimates.