Will Cintas Corporation (CTAS) Miss Earnings? - Analyst Blog

Cintas Corporation CTAS is expected to report its third quarter fiscal 2014 results after the market closes on Mar 19. In the last quarter, it delivered +1.45% earnings surprise. Let's see how things are shaping up for this announcement.

Factors to Consider

Cintas continues to deliver organic growth through superior execution of its operational plans. The company witnessed top-line growth across all the segments in the last reported quarter and expects to continue this in the coming quarters as well.

Cintas's expansion through higher penetration levels and broadening of customer base including business segments that are not historically served, augur well for its growth prospects.

However, an increase in raw material costs and challenging macroeconomic conditions could weigh on the margins going forward. A continuous increase in raw material costs such as cotton, due to global headwinds, may weigh on the margins going forward. Cintas procures raw materials from a wide variety of domestic and international suppliers, making it susceptible to market risks which are beyond its control.

Based on these impediments, Cintas has revised its earnings guidance for fiscal 2014 from its earlier range of $2.70–$2.79 per share to $2.73–$2.79.

Earnings Whispers?

There have been no estimate revisions in the last 30 and 60 days. As a result, the Zacks Consensus Estimate for the current quarter as well as for 2014 has remained unchanged over the same time frame.

However, our proven model does not conclusively show that Cintas will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, #2 or #3 to be able to beat consensus estimates. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate Estimate and Zacks Consensus Estimate currently stand at 70 cents.

Zacks Rank #3 (Hold): Cintas Corporation's Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Here are some companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat in the future.

Ingersoll- Rand plc IR  has an Earnings ESP of +0.64 % and a Zacks Rank #3 (Hold).

Honeywell International Inc. HON has an Earnings ESP of +0.18% and a Zacks Rank #3 (Hold).

Acxiom Corporation ACXM has an Earnings ESP of +11.1% and a Zacks Rank #2 (Strong Buy).