Has the Market Run Too Far Ahead of Cintas After Its Strong Multi Year Rally?

• Wondering if Cintas is still worth buying after its big multi year run, or if the easy money has already been made? Let us walk through what the current share price is really implying about its future.
• Despite some recent volatility, Cintas has eked out gains of 2.5% over the last week and 3.0% year to date, even though the stock is still down 10.7% over the past year after a huge 73.7% move in 3 years and 126.9% in 5 years.
• That mixed performance has unfolded against a backdrop of ongoing demand for workplace uniform and facility services, where Cintas remains a key national player. At the same time, investors have been repricing many high quality, steady growth names as interest rates and macro sentiment shift. This has influenced how the market views Cintas risk and reward profile.
• Right now, Cintas scores just 0/6 on our valuation checks, suggesting it does not screen as undervalued on traditional metrics, but headline scores rarely tell the full story. Next we will unpack what different valuation approaches say about the stock today, and then finish with a more nuanced way to think about what Cintas might really be worth.

Cintas scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Cintas Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, estimates what a business is worth today by projecting its future cash flows and then discounting them back to the present using a required rate of return.

For Cintas, Simply Wall St uses a 2 Stage Free Cash Flow to Equity model based on $1.69 billion of free cash flow over the last twelve months. Analyst forecasts step up over the next few years and then taper into steadier growth. On this basis, free cash flow is projected to reach roughly $3.33 billion by 2035, with estimates from analysts out to 2029 and the remaining years extrapolated from those trends.

When all these future cash flows are discounted back, the model arrives at an intrinsic value of about $163.84 per share. Compared with the current market price, the DCF implies the stock is around 14.5% overvalued right now. This suggests investors are paying a premium for Cintas future cash generation.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Cintas may be overvalued by 14.5%. Discover 909 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Cintas.

Approach 2: Cintas Price vs Earnings

For profitable, mature businesses like Cintas, the price to earnings, or PE, ratio is a useful way to judge valuation because it links what investors pay today directly to the company’s current earnings power. In general, faster growth and lower risk justify a higher PE, while slower growth, more cyclicality, or greater uncertainty call for a lower, more conservative multiple.

Cintas currently trades at about 40.85x earnings, well above the broader Commercial Services industry average of roughly 24.64x and also ahead of its peer group average of 31.72x. On the surface, that premium suggests the market is already pricing in strong growth and attractive economics. However, simple comparisons to peers and the sector can miss important nuances.

Simply Wall St’s Fair Ratio framework estimates what a more tailored PE for Cintas should be, given its specific earnings growth outlook, profit margins, industry positioning, market cap, and risk profile. That Fair Ratio comes out at about 32.51x, which is meaningfully lower than the current 40.85x being paid in the market. On this basis, the stock looks expensive relative to what its fundamentals justify.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1446 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Cintas Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to attach your own story about Cintas to the numbers by linking your view of its future revenue, earnings and margins to a financial forecast, a fair value, and then a clear decision signal on Simply Wall St’s Community page. There, millions of investors publish Narratives that automatically update when new news or earnings arrive and let you compare your Fair Value to today’s share price. For Cintas, you might decide it deserves a bullish Narrative closer to the top analyst target of about $257 because you believe recurring uniform rentals and high returns on capital will stay resilient. A more cautious investor could choose a Narrative nearer the low target around $172 if they think remote work, automation and macro headwinds will slow demand and compress margins. Those two Narratives would turn the same set of facts into very different, but clearly quantified, decisions.

Do you think there's more to the story for Cintas? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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