Critical Comparison: Cintas Corporation (CTAS) vs. G&K Services (GKSR)

Cintas Corporation (NASDAQ: CTAS) and G&K Services (NASDAQ:GKSR) are both industrial products companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, earnings, analyst recommendations, risk, valuation, dividends and institutional ownership.

Dividends

Cintas Corporation pays an annual dividend of $1.33 per share and has a dividend yield of 0.9%. G&K Services does not pay a dividend. Cintas Corporation pays out 26.2% of its earnings in the form of a dividend. G&K Services has raised its dividend for 34 consecutive years.

Earnings and Valuation

This table compares Cintas Corporation and G&K Services’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Cintas Corporation $5.67 billion 2.81 $1.12 billion $5.08 29.57
G&K Services N/A N/A N/A N/A N/A

Cintas Corporation has higher revenue and earnings than G&K Services.

Institutional and Insider Ownership

64.8% of Cintas Corporation shares are held by institutional investors. 18.9% of Cintas Corporation shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Cintas Corporation and G&K Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cintas Corporation 9.79% 23.71% 9.70%
G&K Services 3.79% 9.12% 4.03%

Analyst Recommendations

This is a breakdown of recent recommendations for Cintas Corporation and G&K Services, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cintas Corporation 1 7 2 0 2.10
G&K Services 0 0 0 0 N/A

Cintas Corporation currently has a consensus target price of $139.88, indicating a potential downside of 6.90%. Given Cintas Corporation’s higher probable upside, equities research analysts clearly believe Cintas Corporation is more favorable than G&K Services.

Summary

Cintas Corporation beats G&K Services on 9 of the 11 factors compared between the two stocks.

About Cintas Corporation

Cintas Corporation is a provider of corporate identity uniforms through rental and sales programs, as well as a provider of related business services, including entrance mats, restroom cleaning services and supplies, carpet and tile cleaning services, first aid and safety services and fire protection products and services. Its segments include uniform rental and facility services, and first aid and safety services. Its uniform rental and facility service segment offers services, which include rental and servicing of uniforms and other garments, including flame resistant clothing, mats, mops and shop towels, and other ancillary items. Its first aid and safety service segment offers services, which include first aid and safety products and services. Rental processing plants, rental branches, first aid and safety facilities, fire protection facilities, direct sales offices, distribution centers and manufacturing facilities are all utilized by the businesses included in All Other.

About G&K Services

G&K Services, Inc. is a service-focused provider of branded uniform and facility services programs. The Company provides a range of workwear and protective safety apparel through rental and direct purchase programs. The Company also supplies various facility products and services, including floor mats, towels, mops, restroom hygiene products, and first aid supplies. It also manufactures certain work apparel garments that are used to support its garment rental and direct purchase programs. It operates in two segments: United States (includes the Dominican Republic) and Canada. The Company operated from approximately 160 locations, as of July 2, 2016. The Company serves a diverse base of customer locations in various industries, including automotive, warehousing, distribution, transportation, energy, manufacturing, food processing, retail, restaurants, construction and trades, hospitality, government, healthcare and others.

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