Cintas Corporation (NASDAQ:CTAS) reported its fiscal fourth quarter 2015 results after markets closed on Thursday, beating bottom line estimates with EPS of $0.86 on revenues of $1.14 billion for its fiscal fourth quarter ending May 31. Analysts had expected earnings of $0.85 per share on revenues of $1.15 billion. “Organic growth”, which the company defined as adjusting for acquisition, currency exchange and other impacts was 6%. In the fourth quarter of the last fiscal year, Cintas reported EPS of $1.04 per share on revenues of $1.13 billion. The firm was quick to point out, however, that the fourth quarter 2015 results did not include document shredding revenue as a result of its Shred-It transaction. On Wednesday, the firm announced it will sell its investment in Shred-It International Inc. to Stericycle, Inc. in a deal worth $550 million to $600 million before taxes. In the full 2015 fiscal year, Cintas Corporation (NASDAQ:CTAS) posted a net income from continuing operations of $408.1 million, or $3.44 per share, on revenues of $4.48 billion. “Organic growth” was reported by the company to be 7.1% for the full fiscal year. For the year, gross margin increased by 9.8% to $1.92 billion, or 42.9% of revenue. Operating margin grew by 15.5% to $696.4 million, or 15.6% of revenue. Cintas is also forecasting revenue for the full 2016 fiscal year to be in the range of $4.7 billion to $4.78 billion and an EPS range of $3.74 to $3.83.
Despite the bottom line beat, it’s gloomy news for Cintas Corporation (NASDAQ:CTAS) as far as how the hedge funds we track felt about the company and its prospects. The smart money was bearish on the company during the first quarter. The total value of their holdings in the company decreased by 2.21% to $1.08 billion by the end of said period. This was despite share price growth of 4.07% in the first three months of the year. By March 31, a total of 31 of the hedge funds tracked by Insider Monkey were bullish in this stock, down by two from the fourth quarter, which appears to have been a mistake, as the stock has grown by over 6% since the end of the first quarter.
We don’t just track the latest moves of funds. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research, with backtests for the period between 1999 and 2012 and forward testing for the last 2.5 years. The results of our analysis show that these 15 most popular small-cap picks have a great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in backtests. Moreover, since the beginning of forward testing in August 2012, the strategy worked brilliantly, outperforming the market every year and returning 139%, which is more than 80 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
We also track insider purchases or sales of share since this can tell us whether management teams in places such as Cintas Corporation are bullish on their firm’s shares. There were no insider purchases recorded for Cintas Corporation through July 16, though there were three recorded sales. President and COO James Phillip Holloman sold 3,745 shares of the firm on April 30, while Vice President and General Counsel Thomas Frooman sold equal amounts of 3,945 shares on March 20 and March 23 respectively.
With all of this in mind, we’re going to take a glance at the fresh smart money action regarding Cintas Corporation on the next page.
What have hedge funds been doing with Cintas Corporation (NASDAQ:CTAS)?
According to hedge fund experts at Insider Monkey, AQR Capital Management, helmed by Cliff Asness, holds the most valuable position in Cintas Corporation (NASDAQ:CTAS), as the fund had a $56.1 million position in the stock in 686,705 shares of the firm, comprising 0.1% of its 13F portfolio at the end of March. Mark Wolfson and Jamie Alexander of Jasper Ridge Partners followed Asness with a $52.6 million position of 644,715 shares; 3.9% of their 13F portfolio was allocated to the company. Other peers that hold long positions comprise Joel Greenblatt’s Gotham Asset Management, Steve Cohen’s Point72 Asset Management, and Panayotis Takis Sparaggis’ Alkeon Capital Management.
Cintas Corporation (NASDAQ:CTAS), witnessing bearish sentiment from the entirety of the hedge funds we track, also saw a few fund managers that elected to dump their entire stakes in the first quarter. Intriguingly, Jim Simons‘ Renaissance Technologies cut the biggest position of all the hedgies watched by Insider Monkey, selling 208,776 shares valued at about $16.4 million. Paul Marshall and Ian Wace of Marshall Wace LLP followed, as the fund managers dropped about $14.7 million worth of shares, 187,223 in all.
The bearishness of hedge funds on Cintas Corporation (NASDAQ:CTAS) in the first quarter and the sluggish growth of the company leads us to conclude that a long position in the stock may not be a good idea at the moment.
Disclosure: None
