How Should Investors View Cintas After Analyst Upgrades and a 16% Yearly Drop?

• Wondering if Cintas is trading at a value that makes sense for your portfolio? You’re not alone, as the company’s share price has attracted attention from investors questioning whether the current price is justified.
• After a steady start to the year, Cintas has seen its stock rise 1.0% in the past week and 1.2% over the last month. It is still down 16.0% over the past year despite impressive multi-year gains.
• The recent price movement has been influenced by ongoing conversations around the company’s market positioning and a flurry of analyst upgrades. This reflects growing optimism about long-term performance even as short-term risks remain in focus.
• When it comes to traditional valuation metrics, Cintas currently scores just 0 out of 6 for undervaluation. This suggests that classic models do not signal a bargain, at least at first glance. Let’s break down these valuation methods and see if there might be an even more insightful way to understand whether Cintas offers value today.

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 a company's intrinsic value by projecting its future cash flows and then discounting them back to today's dollars. This approach aims to determine what the business is truly worth based on its ability to generate cash in the years ahead, rather than current profits or assets.

For Cintas, the latest reported Free Cash Flow stands at $1.69 billion. Analysts provide detailed projections for the next five years, anticipating healthy growth as Free Cash Flow is estimated to reach $2.60 billion by 2029. Projections beyond five years, as calculated by Simply Wall St, indicate the company could see FCF surpassing $3.35 billion by 2035. These longer-term figures rely on extrapolation rather than analyst estimates.

The 2 Stage Free Cash Flow to Equity model values Cintas at an intrinsic fair value of $164.43 per share. Compared to its current market price, this signals a 12.8% overvaluation according to the model’s calculations.

While Cintas’s strong and growing cash generation is notable, the DCF suggests investors are paying a premium above what these fundamentals support today.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Cintas may be overvalued by 12.8%. Discover 928 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 the preferred multiple for valuing profitable companies like Cintas, as it relates the current share price to annual profits. This figure helps investors gauge how much they are paying for each dollar of earnings, making it a useful way to compare value across similar firms.

Growth expectations and perceived risks are major influences on what investors consider a “normal” or "fair" PE ratio. Companies with faster earnings growth or lower risk profiles typically command higher PE multiples, while slower-growing or riskier companies trade at lower PE ratios.

Currently, Cintas is trading at a PE ratio of 40.4x, which is noticeably higher than the Commercial Services industry average of 22.8x and also well above the peer average of 30.2x. At first glance, this suggests investors are paying a significant premium.

However, Simply Wall St’s proprietary "Fair Ratio" metric takes a more comprehensive view. It determines what PE ratio is justified given Cintas’s annual earnings growth, profit margins, market capitalization, and risk profile. For Cintas, the Fair Ratio is estimated at 32.5x, offering a more tailored benchmark than industry averages or peer comparisons because it incorporates all these specific factors rather than broad groupings.

With an actual PE of 40.4x versus a Fair Ratio of 32.5x, Cintas shares appear to be priced above what underlying fundamentals would suggest. This points to an overvalued stock at current levels.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1444 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Cintas Narrative

Earlier, we mentioned there is an even better way to understand valuation. Let’s introduce you to Narratives. A Narrative is your story behind the numbers, the way you connect your assumptions about Cintas’s future revenue, earnings, and margins to what you believe is a fair value for the stock. Instead of relying solely on one-size-fits-all financial models, Narratives encourage you to link Cintas’s business strengths, risks, industry changes, and future outlook with your own forecast, creating a clear line from company story to financial outcome.

Narratives are approachable and easy to use. Simply Wall St makes them accessible on the Community page, where millions of investors build and update their own perspectives on Cintas and other stocks. Narratives help you make smarter buy or sell decisions by directly comparing your estimated Fair Value with the current market Price, making it clear when you see a gap worth acting on.

Best of all, Narratives are dynamic. They automatically update alongside new company news, analyst revisions, or earnings announcements, letting your valuation remain relevant in real time. For example, some users see Cintas’s strong recurring revenue and margin expansion as supporting a Fair Value as high as $257 per share, while others, factoring in risks from automation and remote work, see fair value closer to $172. Narratives let you define and act on your own view, no matter how the crowd sees it.

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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