CTAS Cintas
An exceptional route-density compounder whose excellent economics remain overwhelmed by an exceptionally demanding price.
The story
Cintas is a route-density service compounder whose scale, customer retention, and distribution network create durable cost and switching advantages. The business remains a mature growth franchise with opportunities to deepen penetration, but its size and recent slowing require growth to normalize. Margins can improve modestly from current levels, though competition and service intensity limit sustainable upside.
The prior drivers remain broadly intact: route density supports a 25% mature margin, efficient reinvestment, and below-industry risk. First-year growth is trimmed from 8.5% to 8.0% as recent growth has moderated, while a 10-year horizon recognizes the moat without assuming an exceptional 12-15 year runway.
Value drivers
| Revenue growth (Y1) | 8.0% |
| Terminal growth | 3.5% |
| Forecast horizon | 10y |
| Target operating margin | 25.0% |
| Years to target margin | 5 |
| Sales-to-capital | 1.55 |
| Beta | 0.95 |
| Failure probability | 0.5% |
| Cost of capital (WACC) | 8.7% |
| Terminal WACC | 8.9% |
Valuation bridge
| PV of explicit FCFF | 15.90B |
| PV of terminal value | 24.39B |
| Equity value | 37.95B |
| ÷ shares → per share | $94.83 |
News
neutral +0.15 · 8 articles
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Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 11.91B | 8.0% | 23.4% | 2.23B | 569.15M | 1.66B | 1.53B |
| 2 | 12.80B | 7.5% | 23.8% | 2.44B | 576.26M | 1.86B | 1.58B |
| 3 | 13.70B | 7.0% | 24.2% | 2.65B | 578.18M | 2.08B | 1.62B |
| 4 | 14.59B | 6.5% | 24.6% | 2.87B | 574.46M | 2.30B | 1.65B |
| 5 | 15.46B | 6.0% | 25.0% | 3.09B | 564.74M | 2.53B | 1.67B |
| 6 | 16.32B | 5.5% | 25.0% | 3.26B | 548.74M | 2.72B | 1.65B |
| 7 | 17.13B | 5.0% | 25.0% | 3.43B | 526.29M | 2.90B | 1.62B |
| 8 | 17.90B | 4.5% | 25.0% | 3.58B | 497.35M | 3.08B | 1.58B |
| 9 | 18.62B | 4.0% | 25.0% | 3.73B | 461.98M | 3.26B | 1.54B |
| 10 | 19.27B | 3.5% | 25.0% | 3.86B | 420.40M | 3.44B | 1.49B |
Key risks
- Valuation embeds sustained premium growth and execution
- Employment weakness could reduce uniform-wearer volumes
- Competitive pricing or wage inflation could constrain margins
Catalysts
- Continued route-density gains lift margins toward 25%
- Cross-selling and new-customer penetration sustain high-single-digit growth