Cintas stock drops on Q3 revenue miss; earnings beat Street view

Shares of Cintas Corp. (CTAS) declined Thursday during the extended trading session after its third-quarter revenues missed analysts’ estimate. Meanwhile, earnings increased sharply and topped expectations. The company also provided guidance for fiscal 2019.

Reflecting the strong sales growth across all business segments, revenues gained 6% to $1.68 billion in the February quarter but came in slightly below Wall Street’s prediction. The organic sales growth rate for Uniform Rental and Facility Services was 6.2%, while that of First Aid and Safety Services came in at 8.6%.

The organic growth rate for Uniform Rental and Facility Services was 6.2%, while that of First Aid and Safety Services came in at 8.6%

Net profit from continuing operations, adjusted for non-recurring items, moved up to $1.84 per share from $1.37 per share a year earlier.  Analysts were looking for slower growth.

Reported net income, meanwhile, dropped to $200.9 million or $1.83 per share from $295.8 million or $2.66 per share in the third quarter of 2018. The bottom-line was negatively impacted by expenses related to the integration of the recently acquired G&K Services and one-time cash payment to employees pursuant to the new tax legislation.

“Customer closures caused by the severe weather and the holiday calendar during the quarter created challenges within our route schedules. Despite these challenges, we still delivered solid organic growth for the quarter,” said Cintas CEO Scott Farmer.

Also see: Cintas Corporation Q2 2019 Earnings Conference Call Transcript

Looking ahead, the management expects full-year 2019 revenues to be between $6.87 billion and $6.89 billion. Revenues are seen growing in the 6-7% range in the fourth quarter of 2019, and operating income margin in the range of 17% to 17.5%. Full-year earnings from continuing operations are currently forecast in the range of $7.80 per share to $7.86 per share.

During the quarter, Cintas repurchased around $100 million shares and paid a total of $221 million as dividend. The $2.05-per share dividend was higher by 26.5% compared to last year’s amount.

In the final weeks of 2018, Cintas shares bounced back from an eight-month low and maintained the uptrend since then, gaining 24% so far this year. The stock closed Thursday’s trading higher but declined in the after-hours trading.

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