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CTAS – Market expectations are for Uniform ROA to reach all-time highs, but management may have concerns about margins, pricing, and growth

August 11, 2021

  • Cintas Corporation (CTAS:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 32.3x Uniform P/E. At these levels, markets are pricing in bullish expectations for the firm, but management may be concerned about margin guidance, pricing decisions, and Fire Protection business growth.
  • Specifically, management may lack confidence in their ability to meet margin guidance, sustain organic growth in the Fire Protection business, and selectively raise pricing. In addition, they may be overstating the breadth of their product offerings and their commitment to ESG goals.