Penetration Beyond Uniforms & G&K Yielding Over 20% EPS Growth
- Mid-to-high single digit organic growth (7.8% in 3Q18 [Feb]) should continue as around 50% of revenue is now generated from non-uniform products/services such as facility services, first aid & safety, and fire protection, with significant future potential given penetration rates still less than 20% and momentum from the Company’s Ready for the Workday® marketing campaign.
- Cintas now has around a 35% share of the fragmented uniform rental/sales market, is over 2x the size of its nearest competitor, and is expected to realize annual synergies of $130 million-to-$140 million by the fourth year of the G&K acquisition.
- Free cash flow estimated at $598 million for FY19 allows for debt reduction, acquisitions, share repurchases, and dividend increases which have occurred each year since the 1983 IPO, compounding at 20% the last five years.
Cintas is a provider of corporate identity uniforms through rental and sales programs, as well as a provider of related business services, including entrance mats, restroom cleaning services and supplies, carpet and tile cleaning services, first aid and safety services and fire protection products and services. The company's segments are Uniform Rental and Facility Services, which consists of the rental and servicing of uniforms and other garments, including flame resistant clothing, mats, mops and shop towels and other ancillary items; and The First Aid and Safety Services, which consists of first aid and safety products and services.
Great Lakes Review is located in Cleveland, Ohio, was founded in 1981 and became a division of Wellington Shields & Co. LLC in 2011. Great Lakes Review is a research boutique focused on the fundamentally-oriented investor seeking companies that dominate their respective specialty niche regardless of industry. The objective is to make money for the long-term by gradually accumulating a diversified portfolio from a universe of no more than 30 companies. Although short-term-oriented accounts will be alerted to trading opportunities, aggressive sell recommendations are triggered only by a deterioration in long-term fundamentals, not by short-term blips or investor fancy. Coverage of those names that lose their earnings momentum or earnings predictability may be dropped and replaced with more vital candidates.
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