Last update on 2024-06-06

Cintas (CTAS) - Piotroski F-Score Analysis for Year 2023 (Final Score: 9/9)

Cintas (CTAS) achieves a perfect 9/9 Piotroski F-Score in 2023, showcasing excellent financial health with high profitability, liquidity, and operating efficiency.

Short Analysis - Piotroski Score: 9

We're running Cintas (CTAS) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score system rates Cintas (CTAS) highly for its financial health, scoring a perfect 9 out of 9 based on various criteria involving profitability, liquidity, and operating efficiency. The company has shown consistent and robust financial performance over the years, boasting positive net income, cash flow, and return on assets. Additionally, Cintas has a growing current ratio, reduced share dilution, increased gross margins, and improved asset turnover ratio—all indicative of strong operational and financial health.

Insights for Value Investors Seeking Stable Income

Given Cintas's impressive performance against the Piotroski F-Score criteria, it appears to be a very strong investment option. The company's continuous growth in profitability, cash flow, and operational efficiency signals a resilient business model and effective management. Investors looking for stable and undervalued stocks might find Cintas to be a worthwhile investment to consider.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Cintas (CTAS)

Company has a positive net income?

Net Income determines the profitability of the company, essential for its viability.

The Net Income for Cintas (CTAS) in 2023 stands at $1,348,010,000, reflecting a positive trend. Analyzing the historical data over the last 20 years, we observe a generally consistent upward trajectory, barring a few fluctuations during economic downturns. Particularly noteworthy is the growth from $249,253,000 in 2003 to $1,348,010,000 in 2023, representing a more than five-fold increase. This consistent profitability indicates robust financial health, earning Cintas a score of 1 point for this criterion in the Piotroski analysis.

Company has a positive cash flow?

Cash Flow from Operations (CFO) gauges a company’s ability to generate sufficient cash to maintain or expand operations. Positive CFO signifies profitable core operations.

For FY 2023, Cintas Corporation (CTAS) reported a CFO of $1,597,814,000, indicating a positive operating cash flow. This marks another year in the upward trend, reflecting the company's consistent ability to generate cash from core operations. Over the past 20 years, CTAS has shown a reliable increase in CFO, notably surpassing the billion-dollar mark from 2017 onward. This reliability showcases strong business fundamentals and management effectiveness, warranting a score of 1 in this Piotroski criterion, continuing their streak of positive cash flows over two decades.

Return on Assets (ROA) are growing?

Change in ROA: Compare the ROA of 0.1615 in 2023 with the ROA of 0.1508 in 2022. If the ROA increased in 2023 add 1 point if not set it to 0.

The Return on Assets (ROA) for Cintas (CTAS) stands at 0.1615 in 2023, compared to 0.1508 in 2022. This upward trend indicates an improving efficiency in using assets to generate earnings. Despite this increase, Cintas's ROA remains substantially below the industry median of 0.2903 for 2023. The industry median has generally been higher over the past two decades, peaking at 0.4274 in 2006. The steady ascension in Cintas' ROA, particularly from 2022 to 2023, is a positive indicator. Thus, 1 point is added for the increase in ROA.

Operating Cashflow are higher than Netincome?

This criterion examines if the operating cash flow is higher than net income.

For the fiscal year 2023, Cintas (CTAS) reported an operating cash flow of $1,597,814,000 and a net income of $1,348,010,000. Since the operating cash flow exceeds the net income, we add 1 point for this criterion. This trend is positive because it indicates that the company is generating more cash from its operations than it reports as net income, suggesting strong cash flow health and efficient operations. Historically, from 2003 to 2023, Cintas has shown steady upward trends in both operating cash flow and net income. The consistency in higher operating cash flow compared to net income highlights the company's ability to convert its earnings into cash efficiently.

Liquidity of Cintas (CTAS)

Leverage is declining?

Change in Leverage reflects the company's reliance on debt relative to equity from one period to another.

For Cintas (CTAS), the Leverage stood at 0.3207 in 2022 and saw a slight improvement to 0.3071 in 2023. Despite this being a favorable trend, it doesn't merit a point. Detailed historical data dating back to 2003 underscores the context with fluctuations in Leverage, including significant variance such as a peak at 0.4048 in 2017 and a trough at 0.1521 in 2005.

Current Ratio is growing?

The Current Ratio measures a company's ability to cover its short-term liabilities with its short-term assets, and an increasing ratio often indicates improving liquidity.

Comparing Cintas's Current Ratio of 2.3889 in 2023 to 1.8368 in 2022, it is evident that the ratio has increased. This suggests an improvement in the company's liquidity, enhancing its ability to meet short-term obligations without raising additional capital. Specifically, this increase from 1.8368 to 2.3889 is notable against the backdrop of an industry median current ratio of 1.4598 for 2023. Historically, Cintas's current ratio fluctuated, often remaining above the industry median. This upward trend in 2023 critically stabilizes the firm's financial health, reaffirming investor confidence. Consequently, this results in an addition of 1 point to the Piotroski score.

Number of shares not diluted?

The criterion assesses whether a company is reducing its number of outstanding shares. Reducing shares can indicate stock repurchase, often seen as a sign of financial health.

In 2023, Cintas had 101,645,000 outstanding shares compared to 103,172,000 in 2022, a clear decrease of 1.48%. Over the last 20 years, Cintas's share count also fell from 171,898,621 in 2003 to 101,645,000 in 2023. This consistent reduction demonstrates robust stock buyback activity. Thus, for the Piotroski Analysis, this trend is positive, adding 1 point.

Operating of Cintas (CTAS)

Cross Margin is growing?

Change in Gross Margin assesses if the company's profitability is improving.

The Gross Margin for Cintas (CTAS) increased to 47.34% in 2023 from 46.24% in 2022. This 1.1 percentage point increase suggests a positive trend in profitability, attributed perhaps to improved operational efficiencies or cost management strategies. Over the past 20 years, Cintas has consistently outperformed the industry median Gross Margin, highlighting sustained competitive advantage. With the industry's Gross Margin in significant decline in 2023, Cintas's above-average performance cements its strong market position. Thus, adding 1 point is justified.

Asset Turnover Ratio is growing?

The change in asset turnover measures a company's ability to generate sales from its assets. An increase signifies improved efficiency.

Analyzing Cintas Corporation's (CTAS) asset turnover from 2022 to 2023, we can see that there was an increase from 0.9588 to 1.0562. This improvement in asset turnover earns CTAS 1 point in the Piotroski analysis. The 2023 figure demonstrates enhanced efficiency in utilizing its assets to generate sales. Notably, this represents a significant upward trend in the context of the past two decades, as the asset turnover ratio has fluctuated, reaching a low of 0.8948 in 2021. This recent increase is a positive indicator of the company's operational efficiency.