Cintas Outperforms In 1Q11

Cintas Corporation

delivered "F1Q11 EPS of $0.40 (-7% y/y) vs. our estimate/consensus of $0.38. F1Q11 EPS benefited by +$0.03 on unanticipated resolution of tax audits. F1Q11 revenue of $924M (+3.6% y/y) exceeded our estimate/consensus of $919/$915M, as stability persisted and led to internal top-line growth of +2.8% y/y. However, operating margin of 10.9% was below our estimate of 11.4% on higher SG&A costs. CTAS's increased its FY11 EPS guidance range by $0.05 at both ends to $1.55-1.63 on 7.6M shares repurchased ($202M spent) in F1Q11. Operational expectations didn't factor into the increased guidance. While internal Rental and Other Revenue have both turned positive y/y, improvement remains modest and unlikely to drive CTAS significantly beyond its current valuation." according to Oppenheimer, which maintains its Perform rating. Cintas Corporation closed yesterday at $27.88.