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US Equities · Finance research note

CTAS — Cintas

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2. Company Fundamentals

2.1 Competitiveness

Metric Value
Operating Margins 23.22%
Profit Margins 17.57%
Return on Equity 41.3%
Return on Assets 15.94%
Free Float 0.34B
Dividend Yield 1.05%
Short Int % Utilisation 3.99%

2.2 Growth

Metric Value
Revenue Growth 8.9%
Free Cash Flow 1.51B
EBITDA 25.8 (Ratio)
Enterprise Value 74.91B
EV/Revenue 6.79
EV/EBITDA 25.8

Revenue growth of 8.9% indicates steady, moderate expansion.

2.3 Management

Role Metric
Consensus Rating N/A

2.4 Return

Metric Value
Expected Return (Ann.)* -4.76%
Risk / Std Dev (Ann.)* 23.26%
1-Year Price Return* -7.18%

Latest Market Data (as of 2026-08-14, US Eastern time):

Metric Value
Last Price $199.52
52-Week Range $161.16 – $221.36
Observation Count 249 trading days

The return and risk statistics use daily adjusted closes from the retrieved one-year series and annualise daily moments using 252 trading days. The last price is the latest regular-market price reported for the stated date. Source: Yahoo Finance market data.

DuPont Model Analysis

The DuPont model decomposes return on equity (ROE) into three operating and capital-structure drivers:

ROE = Net Margin × Asset Turnover × Equity Multiplier

The comparison uses the latest two comparable annual periods available for the issuer, with reported statement amounts shown in US$. Revenue and net income are income-statement flows; total assets and shareholders’ equity are year-end balance-sheet figures. This is a simplified year-end-balance DuPont comparison rather than an average-balance ROE calculation.

DuPont component Calculation FY2026 FY2025
Revenue Reported revenue $11.26B $10.34B
Net income Reported net income $1.99B $1.81B
Total assets Year-end reported balance $10.53B $9.83B
Shareholders’ equity Year-end reported balance $5.14B $4.68B
Net margin Net income ÷ revenue 17.70% 17.47%
Asset turnover Revenue ÷ total assets 1.0699x 1.0524x
Equity multiplier Total assets ÷ shareholders’ equity 2.0485x 2.0974x
ROE Net margin × asset turnover × equity multiplier 38.79% 38.55%

Source: Yahoo Finance annual statements. Values are based on the two latest comparable annual periods returned by the source; fiscal period labels use the statement period-end year.

2.5 FCFF DCF Valuation

Valuation basis: This research model follows a five-year, unlevered FCFF DCF. It starts from reported annual operating inputs, forecasts revenue and operating cash conversion under an explicit mechanical policy, discounts FCFF at WACC, applies a Gordon-growth terminal value, and bridges enterprise value to an indicative common-equity value per share. It is an analytical estimate rather than a recommendation or personalised target price.

Step 1 — Forecast Operating Profit and NOPAT

Reported operating input Value
Revenue $11.26B
Prior annual revenue $10.34B
EBIT $2.61B
Tax rate 20.20%
NOPAT = EBIT × (1 − tax rate) $2.08B
Forecast start-growth basis 8.94%
Forecast policy latest reported annual revenue growth, bounded to -10.00% / 15.00%

Step 2 — Calculate FCFF

Current FCFF building block Value
NOPAT $2.08B
Add: depreciation & amortisation $512.85M
Less: capital expenditure -$395.11M
Less/(add): working-capital cash-flow movement -$422.70M
Current unlevered FCFF $1.78B

Explicit FCFF forecast

Forecast year Revenue growth NOPAT D&A Capex Change in NWC FCFF Present value
1 8.94% $2.27B $558.70M -$430.43M -$460.50M $1.94B $1.85B
2 7.33% $2.44B $599.66M -$496.41M -$494.26M $2.05B $1.78B
3 5.72% $2.58B $633.97M -$561.19M -$522.53M $2.13B $1.69B
4 4.11% $2.68B $660.03M -$622.14M -$544.01M $2.18B $1.58B
5 2.50% $2.75B $676.53M -$676.53M -$557.61M $2.19B $1.45B

Step 3 — Determine the Discount Rate (WACC)

WACC input Value
Risk-free rate 4.71%
Equity risk premium assumption 5.50%
Beta 0.92
Cost of equity 9.76%
Pre-tax cost of debt 3.97%
WACC 9.55%
WACC validation within standard range

Step 4 — Estimate Terminal Value

Terminal-value input Value
Perpetuity growth rate 2.50%
Terminal value $31.89B
Implied terminal EV / EBITDA 7.74x
Terminal value as % of enterprise value 70.73%

Step 5 — Discount Cash Flows to Enterprise Value

Enterprise-value component Value
Present value of explicit FCFF $8.37B
Present value of terminal value $20.21B
Indicated enterprise value $28.58B
Discounting convention mid-year for explicit FCFF; terminal value discounted at year-end five

Step 6 — Convert Enterprise Value to Equity Value

Equity bridge Value
Indicated enterprise value $28.58B
Less: gross interest-bearing debt $2.71B
Add: cash and equivalents $289.02M
Add: affiliate investments $0.00
Less: minority interests $0.00
Indicated common equity value $26.16B

Step 7 — Calculate Indicative Value Per Share

Per-share output Value
Shares used 406,197,000.00
Share-count basis reported diluted weighted-average shares
Current market price $199.90
DCF indicative value per share $64.40
Indicative value vs. market price -67.78%

Model Integrity Checks

Check Result
Perpetuity growth is below the risk-free rate pass
Perpetuity growth is below WACC pass
WACC is within the configured operating-company range pass
Terminal-year FCFF is positive pass
Terminal capex converges to D&A pass
Terminal-value concentration within review band
Implied price differs from spot by more than 30% review required

2.6 Investor-Style Research Screen

Educational screen Result
Buffett-inspired cash-quality checks 3/4 evidenced checks
Lynch-inspired balance-and-growth checks 4/4 evidenced checks

Data lineage: Yahoo Finance public market and reported-statement data; retrieval timestamp: 2026-08-18 17:28:52.581906 UTC; latest reported fiscal period: 2026-05-31 00:00:00. Default assumptions: five-year forecast, mid-year discounting for explicit FCFF, a maximum 2.50% perpetuity-growth rate below both WACC and the risk-free rate, historical operating-ratio persistence, and capex convergence to D&A by year five. No sell-side consensus or management guidance is substituted for reported inputs. This is research and analysis only, not personalized financial advice.

2.7 Quantitative Factor Diagnostics

Model basis: Daily issuer USD excess returns are regressed in-sample using ordinary least squares on matching regional Fama–French factors. FF3 estimates market, size, and value loadings; FF5 adds profitability and investment. Coefficients are descriptive historical exposures, not predictions.

Estimation input Value
Regional factor set US
Factor-return currency USD
Issuer-return basis USD adjusted total return
Estimation window 2025-08-19 to 2026-06-30
Aligned daily observations 217
Minimum observation requirement 120
Currency conversion for HK listings not required

Fama–French Three-Factor and Five-Factor Results

Diagnostic FF3 FF5
Annualised alpha -32.74% -16.92%
Adjusted R² 0.07 0.27
Annualised residual volatility 20.05% 17.67%
Factor loading (t-statistic) FF3 FF5
Market excess return (Mkt-RF) 0.35 (2.99) 0.81 (6.74)
Size (SMB) 0.27 (1.72) 0.27 (1.80)
Value (HML) 0.21 (1.53) -0.27 (-1.82)
Profitability (RMW) NM 0.76 (5.99)
Investment (CMA) NM 0.78 (3.57)

Definitions: Mkt-RF is the market return less the risk-free rate; SMB is small minus big; HML is high minus low book-to-market; RMW is robust minus weak profitability; CMA is conservative minus aggressive investment. Factor returns are sourced from the Kenneth R. French Data Library; issuer adjusted-return history is sourced from Yahoo Finance. For Hong Kong listings, adjusted HKD prices are converted into USD with daily USD/HKD closes before return calculation to match the USD regional factor basis. This is an in-sample historical regression; coefficients and t-statistics do not establish causation or predict future returns. This is research and analysis only, not personalized financial advice.

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