On September 23, Cintas Corporation (NASDAQ:CTAS) reported results for the first quarter of fiscal 2027, ended August 31, 2026. The company delivered a strong performance as revenue and adjusted earnings per share both exceeded market expectations. Cintas also raised its full-year guidance
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Revenue increased 10.9% year-over-year to $3.01 billion, above market expectations of $2.98 billion. Adjusted diluted EPS rose 15.8% to $1.39, compared with market expectations of $1.35.
Following the stronger-than-expected quarter, Cintas raised its full-year fiscal 2027 guidance. The company now expects revenue of $12.15 billion to $12.27 billion, compared with its previous range of $12.10 billion to $12.25 billion. Adjusted diluted EPS guidance was also raised from a range of $5.36 – $5.50 to a range of $5.45 – $5.54.
The adjusted EPS guidance excludes non-recurring transaction costs related to the company’s planned acquisition of UniFirst. The company is still working to obtain regulatory clearance and complete other closing conditions and remains optimistic that the deal will close by the end of calendar 2026.
Gross margin for the first quarter of fiscal 2027 was $1.55 billion compared to $1.37 billion in last year’s first quarter, an increase of 13.7%. Gross margin as a percent of revenue was 51.5%. Cintas also continued to improve profitability, as Q1 gross margin surged 13.7% year-over-year to reach $1.55 billion. Gross margin as a percentage of revenue grew by 120 basis points to 51.5%, up from 50.3% in the prior-year quarter.
CEO Todd Schneider also pointed out that the company is in the early stages of cross-selling, which could potentially be a growth driver. Management said most of the firm’s current momentum is coming from volume growth, including new customers, improved retention, and higher cross-selling. These factors also contributed in Cintas raising its full-year guidance.
Second-Half Headwinds and UniFirst Uncertainty Remain
Despite the strong results, the company faces some risks. Cintas Corporation operates in a highly competitive market, which limits its ability to increase prices to offset inflation.
Management also expects incremental margins to face pressure in the second half of the fiscal year, especially in Q3 because of one less workday and tougher comparisons.
The UniFirst transaction remains another source of uncertainty. Transaction-related expenses reduced GAAP EPS by $0.03 in the quarter and are expected to continue affecting results. In addition, the acquisition still requires regulatory clearances in the US and Canada. This creates some uncertainty and potential delays.
Bernstein SocGen analyst Connor Cerniglia believes that “the margin upside was likely well advertised intra-quarter, and with the market implying a greater risk of FTC intervention of the UNF deal, perhaps investors are sitting on the sidelines waiting for more clarity.”
Hedge Fund Interest
Hedge fund interest in the stock slightly increased during the second quarter. According to Insider Monkey‘s database, 64 hedge funds held Cintas Corporation at the end of the second quarter, up from 63 in the first quarter.
Short interest also remains relatively limited. As of August 31, short interest stood at 3.76% of CTAS’ float, indicating a relatively low level of bearish positioning in the stock.
The bearish thesis remains centered on the potential for second-half margin pressure, limited pricing flexibility, and uncertainty surrounding the UniFirst acquisition. However, the recent quarterly results support the bullish case as the company delivered double-digit revenue growth, exceeded both revenue and adjusted EPS expectations, expanded gross margin, and lifted its full-year guidance. The continued momentum in customer additions, retention, and cross-selling also gives Cintas multiple sources of volume growth rather than relying solely on pricing.
