On Monday, Citi reiterated its Sell rating on Cintas Corporation shares (NASDAQ:CTAS), with a price target set at $570.
The firm based its valuation on a 25 times forward-year two enterprise value to earnings before interest and taxes (EV/EBIT) multiple. This represents a 30% premium over the company's 2019 average, acknowledging Cintas' increased market share and significant margin growth since that time.
The price target reflects Citi's optimism about Cintas' robust earnings before interest and taxes (EBIT) growth expectations.
" We see the multiple premium to other Uniforms peers as warranted given Cintas™ scale, industry-leading margins and financial KPIs, technological leadership and low-risk balance sheet, and more broadly we see the Uniforms Rental sector as having several key appeals where a high multiple can be justified," said the analysts.
Despite these positive factors, Citi's target remains below the current trading levels of Cintas' stock.
InvestingPro Insights
In light of Citi's Sell rating on Cintas Corporation (NASDAQ:CTAS), it's worth noting some key metrics and insights from InvestingPro that could help investors make more informed decisions. Cintas boasts an impressive Gross Profit Margin of 48.46% over the last twelve months as of Q3 2024, which supports Citi's acknowledgment of the company's industry-leading profit margins. Additionally, the company's ability to maintain robust margins is reflected in its Operating Income Margin of 21.17% during the same period.
While Citi has concerns about the company's valuation, it's important to consider that Cintas has a Market Cap of $68.84 billion and trades at a high P/E Ratio of 46.36, which aligns with Citi's view of the stock trading at a premium. The company's stock has also shown resilience with a 1 Year Price Total Return of 43.34%, indicating strong performance in the market.
InvestingPro Tips highlight that Cintas has a perfect Piotroski Score of 9, suggesting strong financial health, and has maintained dividend payments for 32 consecutive years, reflecting a commitment to shareholder returns. For investors looking for a deeper dive into the company's financials and future outlook, InvestingPro offers additional tips and metrics. There are 16 more InvestingPro Tips available for Cintas, which can be accessed by visiting: https://www.investing.com/pro/CTAS. To enhance your investing strategy with these insights, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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