2. Cintas Corporation (NASDAQ:CTAS)
Number of Hedge Fund Holders: 32
Cintas Corporation (NASDAQ:CTAS) is headquartered in Cincinnati, Ohio, and the company provides corporate identity uniforms and related business services in the United States, Canada, and Latin America. Cintas Corporation (NASDAQ:CTAS) declared a $1.15 per share quarterly dividend, a 21.1% increase from its prior dividend of $0.95. The dividend is payable on September 15, to shareholders of record on August 15.
Cintas Corporation (NASDAQ:CTAS) also announced that its board authorized an additional share buyback program for up to $1 billion of its common stock at market rate. Paired with an existing share repurchase program, Cintas Corporation (NASDAQ:CTAS) is eligible to buy up to $1.5 billion of its common shares at market prices. The stock gained 1.40% on July 27.
On July 15, Baird analyst Andrew Wittmann reiterated an Outperform rating on Cintas Corporation (NASDAQ:CTAS) and lowered the firm’s price target on the stock to $440 from $458. The analyst said he has relatively less conviction due to the stock’s outperformance but he said little has changed after its strong top-line performance and positive commentary. He believes the company’s size and dominant market share makes it best positioned to survive an economic downturn.
Among the hedge funds tracked by Insider Monkey, 32 funds were bullish on Cintas Corporation (NASDAQ:CTAS) at the end of Q1 2022, compared to 42 funds in the prior quarter. Ian Simm’s Impax Asset Management is the leading stakeholder of the company, with more than 1 million shares worth about $468 million.
Here is what Cooper Investors Global Equities Fund has to say about Cintas Corporation (NASDAQ:CTAS) in its Q1 2022 investor letter:
“During the quarter the Fund established a position in Cintas Corporation, a market leader in uniform rental services across North America (Mcap $44bn). This service provides workwear for large corporate and government clients, for example managing supply and laundry of uniforms for the nationwide employee base of customers such as Home Depot.
Uniform rental is a tough local business (Cintas has a million customers) but management have built a high quality business operating with stable and growing recurring revenues and have consistently delivered for shareholders. They have the scale and a superior service offering which drives a unique and attractive return profile, including mid-to-high single digit sales growth, 40% returns on tangible funds employed, and earnings per share that have risen for an impressive 50 of the last 52 years.
The opportunity to invest arose following a 20% sell-down as Cintas was caught up in the sell-down in stable compounding businesses during the quarter, despite no change in the outlook or fundamentals for the business.
We view Cintas as a well-positioned Stalwart that can successfully navigate the existing environment. They have the ability to leverage what is a dominant position to grow market share and raise pricing to align with inflation. Cintas could enter a strong period of growth as job openings are filled, manufacturing moves back onshore and the continued growth from service-based industries outsourcing their uniforms. Led by Chairman and descendent of the founder Scott Farmer (also the largest shareholder at 15% of the company) we expect Cintas to continue their track record as excellent operators over the short, medium and long term.”
