At US$517, Is It Time To Put Cintas Corporation (NASDAQ:CTAS) On Your Watch List?

Let's talk about the popular Cintas Corporation (NASDAQ:CTAS). The company's shares had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of US$479 to US$523. However, is this the true valuation level of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Cintas’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Cintas

What Is Cintas Worth?

The stock is currently trading at US$517 on the share market, which means it is overvalued by 29% compared to my intrinsic value of $399.58. This means that the opportunity to buy Cintas at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Cintas’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Cintas look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Cintas' earnings over the next few years are expected to increase by 32%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? CTAS’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe CTAS should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on CTAS for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for CTAS, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Cintas as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 1 warning sign for Cintas you should be aware of.

If you are no longer interested in Cintas, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.