On September 18, during the episode of Mad Money, Jim Cramer said Cintas Corporation (NASDAQ:CTAS) is entering its fiscal first-quarter earnings report with “a full head of steam,” as he said:
Wednesday, besides the Okta meeting, we have reports from two companies that are very important to small and medium-sized businesses. Cintas, they do uniforms and Paychex. Now, actually, I should say, do more than uniforms at Cintas. They’ve got a lot of other things but it’s a pretty good business… Both are coming in earnings with a full head of steam. Makes sense. That segment of the economy remains the hottest and historically won’t be hurt by that first rate hike.
Cintas Enters Fiscal 2027 With Solid Operating Growth
Cintas Corporation finished fiscal 2026 with revenue of $11.26 billion, up 8.9%, while organic revenue growth was 8.3%. Fourth-quarter revenue rose 8.9% to $2.91 billion, organic revenue growth was 8.4%, and gross margin reached an all-time high of 51%. The company said in a September 15 SEC filing that fiscal 2026 was marked by “strong organic revenue growth and expanded profitability.” It said its focus entering fiscal 2027 would remain on “continuous improvement, delivery of superior products and services and disciplined execution.”
Cintas expects fiscal 2027 revenue of $12.10 billion to $12.25 billion and adjusted diluted EPS of $5.36 to $5.50. That represents revenue growth of 7.4% to 8.7% and adjusted EPS growth of 8.5% to 11.3%.
Cintas’ Valuation Raises the Cost of Missing Expectations
The bearish case is tied to valuation. Cintas Corporation closed at $197.64 on September 18, while Yahoo Finance shows a forward P/E of 36.23 as of September 17. The pending UniFirst acquisition adds another cost factor. The company expects fiscal 2027 net interest expense of approximately $105 million, compared with $101.2 million in fiscal 2026, primarily because of bridge-loan financing expenses. Adjusted EPS guidance also excludes nonrecurring UniFirst transaction costs. The fiscal 2027 guidance excludes the expected impact of the UniFirst acquisition itself. The company enters the report with a high valuation, moderating revenue-growth guidance and additional costs tied to the UniFirst transaction.
Hedge Fund Ownership Shows Little Change
Insider Monkey’s tracking of more than 1,000 hedge funds showed 64 hedge fund holders in the second quarter, compared with 63 in the previous quarter. Of those hedge funds, Arrowstreet Capital was the top shareholder and increased its position by 35% to 2.75 million shares. The other prominent hedge fund shareholders, Impax Asset Management and Millennium Management, increased their positions by 61% and 53%, respectively. As for its short interest, it was approximately 3.4% to 3.9% of the float. Cramer’s “full head of steam” comment now faces the September 23 results, with investors looking for evidence that Cintas Corporation can maintain its recent revenue and margin performance while carrying pre-closing financing and transaction costs associated with UniFirst.
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