After reporting second-quarter earnings, which fell below expectations, Cintas Corp. (CTAS) now provided a lower-than-expected guidance for the second half of fiscal 2010. The company has given its revenue and earnings outlook for the third and fourth quarter of fiscal 2010, although it did not provide any guidance earlier due to uncertainties regarding job recovery.
For the third quarter, the company forecasts earnings in the range of 29–31 cents per share on revenues of $850–$860 million, compared to prior-year earnings of 47 cents per share on revenues of $909 million. For the fourth quarter the company expects revenue in the range of $870–$890 million and earnings of 30–34 cents per share, compared to revenue of $879 million and earnings of 38 cents per share in the fourth quarter of fiscal 2009. Cintas expects a very slow improvement in the job market in the fourth quarter.
Earnings estimate for the third as well as fourth quarter was lower than analysts’ expectations, which according to the company are too optimistic. The Zacks Consensus Estimate for the third and fourth quarter is 38 cents and 41 cents, respectively. None of the 10 analysts, covering the stock, have revised their estimates in the last 30 days.
Increasing job losses are adversely impacting the company’s top-line. Approximately two-thirds of the job losses occurred in traditional uniform-wearing industries, and Cintas derives more than 80% of its revenue from Uniform Direct Sales and Rental Uniform and Ancillary Products segments.
Being a market leader in its business, Cintas is confident of posting strong growth on economic recovery. The company is on the lookout for the right acquisition opportunities at attractive valuations to expand its presence both in the domestic and international markets.
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