Evaluating Cintas Shares After National Expansion and a 15% Drop This Year

• Ever catch yourself wondering if Cintas stock is a hidden value gem or already priced to perfection? You are not alone, and today we are diving right into that question.
• Recently, Cintas shares have seen some ups and downs, losing 0.7% over the past week and dropping 15.2% in the last year, but still boasting a strong 113.6% gain over five years.
• Market chatter has swirled around Cintas after recent news of its ongoing national expansion and strategic partnerships with major healthcare providers. Many believe these developments could shape its long-term outlook. These moves have caught investors' attention and may explain some of the volatility in share price.
• When it comes to valuation, Cintas currently has a score of 0 out of 6 on our undervaluation checks, so not exactly a slam dunk bargain by traditional metrics. Let us unpack those valuation methods, and stick around, because there is an even smarter way to assess value that you will not want to miss at the end.

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

The Discounted Cash Flow (DCF) model estimates the value of a company by projecting its future cash flows and discounting them back to their present value. This approach helps investors gauge whether a stock’s current price is justified by its expected long-term earnings power.

For Cintas, the latest reported Free Cash Flow sits at $1.69 billion. Analysts forecast the company's annual cash flows will rise over time, with projections reaching approximately $2.60 billion by 2029. Beyond the five-year analyst consensus period, additional growth estimates are extrapolated to provide a full ten-year outlook.

Using this data, the DCF model calculates Cintas’s intrinsic fair value at $161.89 per share. Compared to its current market price, this indicates that Cintas is trading at a 13.6% premium to its estimated fair value. In other words, the stock appears overvalued according to this method, with the market price running ahead of projected cash flows.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Cintas may be overvalued by 13.6%. Discover 905 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

The Price-to-Earnings (PE) ratio is one of the most widely used valuation tools for profitable companies like Cintas because it directly compares the company's share price to its earnings. This makes it a helpful gauge for judging whether a stock is getting ahead of itself or if there is still value left on the table.

Growth expectations and risk both play a big role in what constitutes a "normal" or fair PE ratio. Typically, companies with higher expected earnings growth or less risk deserve a higher PE, while those facing more uncertainty or slower growth tend to trade at lower multiples.

Cintas currently trades on a PE ratio of 40.06x. For comparison, the industry average PE is 21.95x, and the company's peer group trades at around 30.02x. So, on a pure multiple comparison, Cintas looks expensive.

This is where Simply Wall St’s proprietary "Fair Ratio" comes in. The Fair Ratio for Cintas is 29.94x, derived from factors like the company’s forecast earnings growth, profit margin, scale, and the risks it faces. This provides a more tailored benchmark than just comparing with peers or the wider industry.

Comparing Cintas’ current PE (40.06x) to its Fair Ratio (29.94x), the stock trades well above what would be considered fair based on its fundamentals, suggesting that investors are paying a premium that may not be justified by earnings prospects alone.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1416 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 Narrative is simply the story you believe about a company: where it is heading, how its industry is changing, and how those changes will affect its financial future. Unlike static models or ratios, Narratives connect the dots between a company’s business outlook, your own assumptions for future revenue, earnings, and margins, and arrive at your view of fair value at the end.

On Simply Wall St’s Community page, you will find this tool being used by millions of investors, letting you easily build, share, and compare Narratives. All information is automatically updated when new earnings reports or news headlines break. Narratives help you make buy or sell decisions by transparently comparing your fair value to the current share price, so you can see if your assumptions support action or patience as the company’s story unfolds.

For example, some investors see Cintas at $257 per share, believing its expansion and high-margin business lines will fuel further growth. Others set their fair value closer to $172, citing risks from remote work and rising cost pressures. Narratives make these perspectives visible, actionable, and always up to date.

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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