CTAS – Market expectations are for Uniform ROA to reach new peaks, but management may be concerned about their customers, offerings, and coronavirus

• Cintas Corporation (CTAS:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 35.1x Uniform P/E. At these levels, markets are pricing in bullish expectations for the firm, but management may be concerned about their customers, potential of new and old offerings, and coronavirus
  
• Specifically, management may lack confidence in their clients’ ability to reopen businesses, and their ability to meet the needs of their customers. Furthermore, they may have concerns about the potential shutdown of their facilities, the potential of their new and existing offerings, and opportunities regarding share buybacks. Management may also be exaggerating their ability to manage their cost structure, and they may lack confidence in the potential of their SAP system, and in their ability to secure new acquisition wins. Moreover, they may have concerns about their ability to bounce back after the crisis subsides, the continued impact of the pandemic on the fire and Uniform Direct Sales business, and the sustainability of their healthcare business