Cintas Corporation (CTAS): what the price requires
At today's price, Cintas Corporation (CTAS) is priced for +27.0% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/CTAS
Headline
| Field | Value |
|---|---|
| Ticker | CTAS |
| Company | Cintas Corporation |
| Current price | $183.26/sh |
| Composition | Uniform Rental and Facility Services 87% / First Aid and Safety Services 13% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 12.7% |
| Operating margin today | 23.2% |
| Margin compression implied | -10.5pp |
| Implied growth | 27.0% |
| Multiple paid | 30x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 9% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.8pp.
How unusual the bet is: high
| Reference | Value |
|---|---|
| vs own history | +2.29σ |
| cohort percentile (of 210 peers) | 81 |
| sustained it ~5 years at this level | 27% |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 3.54x | 5 | expensive |
| Earnings | 4.47x | 5 | expensive |
| Relative | 2.73x | 5 | expensive |
| Growth | 1.23x | 3 | expensive |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.9%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $98.61 | 1.86x | yes | FCF base $1.9B, growth 9% (input: historical growth), terminal g 4.0%, WACC 8.9%, 6yr projection |
| DCF Exit Multiple | Growth | $170.62 | 1.07x | yes | Exit EV/EBITDA: 26.9x / 28.9x / 30.9x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $127.20 | 1.44x | yes | P/E 26.89x (blended: static sector reference 22x + trailing (TTM) 38x), scenarios: 22.5x / 26.9x / 31.3x (bear / base = reference held flat / bull), EV/EBITDA 18.48x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $51.75 | 3.54x | yes | BV/sh $11.83, ROE (TTM) 40.5%, ke 9.3% |
| Two-Stage Excess Return | Asset | $120.78 | 1.52x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $148.58 | 1.23x | yes | Rev $11.0B, growth 9% (input: historical growth; tapered), Terminal P/S: 5.6x / 6.7x / 7.8x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $56.76 | 3.23x | yes | EPS $4.73, growth 9% (input: historical EPS growth), PEG=4.05 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $35.96 | 5.10x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $2.02B × (1−21%) / WACC 8.9% → EPV (no growth) |
| Residual Income | Asset | $82.04 | 2.23x | yes | BV $11.83 + 5yr PV of (ROE (TTM) 40.5% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $35.48 | 5.17x | yes | √(22.5 × EPS $4.73 × BVPS $11.83) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $85.15 | 2.15x | yes | EBITDA $2.66B × sector EV/EBITDA 14.0x |
| FCF Yield | Earnings | $41.04 | 4.47x | yes | FCF $1789.2M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $37.62 | 4.87x | yes | SBC-adj FCF $1.66B (FCF $1.79B − SBC $0.13B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $108.69 | 1.69x | yes | EPS $4.73 × (8.5 + 2×9.5%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $9.23 | 19.85x | yes | BV $11.83 × (ROIC 7.0% / WACC 8.9%) |
| P/Sales Sector | Relative | $54.49 | 3.36x | yes | Revenue $11.03B × sector P/S 2.0x |
| PEG Fair Value | Relative | $67.11 | 2.73x | yes | EPS $4.73 × (PEG 1.5 × growth 9.5% (input: historical EPS growth)) → PE 14.2x |
| Earnings Yield | Earnings | $51.14 | 3.58x | yes | EPS $4.73 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $2.5b |
| Net debt / NOPAT (after-tax) | 1.22x |
| Net debt / operating income (pre-tax) | 0.97x |
| Interest coverage | 24.2x |
| Share count CAGR (buyback) | -1.1% |
| Burning cash | no |
Bullet Takeaways
At $170.91 (as of June 27, 2026) the price pays about 28x company-wide operating income, which implies roughly 25% annual operating-profit growth for five years. That pace runs well above what Cintas has actually delivered, and only about 30% of comparable fast-growers sustained it that long.
The market is paying for compounding quality the standard frames structurally cannot capture, which is the whole question on a name this richly valued.
The business itself is exceptional: a 23% operating margin, roughly 95% of revenue from recurring route servicing, interest covered about 24 times, and the pending $5.5 billion UniFirst acquisition that would consolidate the uniform-rental market.
Bull Case
What the standard valuation models miss about Cintas is the durability of a route-density compounder. The models see a 23% operating margin and a modest book value and conclude the stock is expensive; what they cannot price is a business where roughly 95% of revenue comes from fees for route servicing of uniform rental, first aid and safety, and fire protection customers (FY2025 10-K, accession 0000723254-25-000017). That recurring base, delivered over an established network of delivery routes, is the asset, and it does not show up cleanly on the balance sheet. Each new customer added to an existing route is nearly pure incremental margin, which is why a business with an ordinary-looking book value earns a 40% return on equity. The numbers understate what the business actually does because the value sits in the route network and the switching costs of being the vendor that shows up every week.
The execution record backs the premium. Q3 fiscal 2026 revenue rose 8.9% to $2.84 billion, with gross margin hitting an all-time high of 51.0%, and management raised full-year guidance to revenue of $11.21 to $11.24 billion and adjusted EPS of $4.86 to $4.90, roughly 11% earnings growth. The balance sheet is pristine: net debt of about $2.5 billion is just under 1x operating income, and interest is covered about 24 times. This is a company that compounds earnings in the high single to low double digits almost every year, funds it internally, and buys back stock on top.
The transformational catalyst is consolidation. On March 10, 2026, Cintas agreed to acquire rival UniFirst in a cash-and-stock deal valuing UniFirst at about $5.5 billion. The combination removes a direct competitor, adds route density that drops straight to margin, and gives Cintas a larger base to spread its operating leverage across. Management plans to keep expanding into new markets and opening operating facilities to gain capacity (FY2025 10-K, accession 0000723254-25-000017), and the UniFirst deal accelerates that geographically. Baird upgraded the stock to Outperform on the deal's synergy potential. The bull case is simple: Cintas is the best operator in a consolidating, recurring-revenue industry, and the standard valuation frames have undercharged for that quality for years.
Bear Case
The bear case is best framed as a disagreement among the valuation methods, and the conservative ones are likely the more honest read. Every model family lands below the price, and the spread is wide. The earnings-power methods are the most emphatic: the Earnings Power Value method lands near $21 and the FCF-yield method near $41, both a fraction of the $170.91 price, because they capitalize the cash the business actually produces today rather than a projection of compounding. The relative methods land near $123 on a blended multiple, the asset methods cluster in the $35 to $120 range, and even the forward-growth methods top out near $82 to $95. When the most optimistic standard frame still sits below the quote, the burden of proof shifts entirely onto the durability assumption.
The inversion quantifies how demanding that assumption is. At about 28x operating income the price embeds roughly 25% annual operating-profit growth for five years, which is well above what Cintas has historically delivered, and the multiple sits at the very top of its peer distribution, beyond the upper quartile. Only about 30% of comparable fast-growers sustained that pace for five years. Cintas grows beautifully, but in the high single digits, not 25%, so the price requires either a multiple that never compresses or growth that suddenly accelerates beyond the company's own history. The implied operating margin the price requires, about 12%, sits below today's 23%, which is the model's way of saying the price is leaning hard on revenue compounding rather than margin.
The UniFirst deal cuts both ways. It removes a competitor, but it also introduces integration risk and dilution into a stock that already prices perfection, which is why Citi, UBS, Stifel, Goldman, and Truist all trimmed their price targets on valuation and execution concerns even while staying constructive. The business faces real cost pressures from labor, employee-classification regulations, higher material costs for fabrics and textiles, and insurance (FY2025 10-K, accession 0000723254-25-000017), and a slowdown in employment reduces uniform demand directly. None of that is a crisis. The bear case is narrower and more durable: this is a wonderful business at a price that needs everything to keep going right, and the conservative methods say the cushion is thin to negative.
Valuation
Start from the price and invert it. At $170.91 the market pays about 28x company-wide operating income, which solves to roughly 25% annual operating-profit growth over five years, computed at a 9.1% cost of capital with 4% terminal growth. That assumption is high: it runs well above what Cintas has actually delivered, the multiple sits at the very top of its peer distribution, and only about 30% of comparable fast-growers sustained that pace for five years. The read is rate-sensitive, with each one-point move in the cost of capital shifting the required growth by about 7.6 points, but the central point stands regardless of rates: the price embeds an acceleration the company's own history does not show.
The valuation X-ray reinforces it because no family reaches the price. The relative methods land near $123, the forward-growth methods near $82 to $95, the asset methods between roughly $35 and $120, and the earnings-power methods near $21 to $41. Every standard frame, including the growth-DCF, says the price is a bet beyond what the methods support.
The synthesis is that Cintas is priced as a best-in-class compounder, and the entire premium rests on durability the static methods cannot capture: route density, recurring revenue, and high switching costs. If you believe that quality justifies a permanent premium and the UniFirst deal extends the runway, the price is the cost of owning a great business. If you weight the conservative methods, the stock is expensive by every measure and the $116 base is the relevant anchor. Wall Street targets cluster near $215 to $250 on a forward-EPS basis, well above the current quote, which shows the Street is firmly in the quality-premium camp even as several houses trimmed targets on the deal.
Catalysts
The defining catalyst is the $5.5 billion UniFirst acquisition, announced March 10, 2026, in a cash-and-stock deal that gives UniFirst holders $155 in cash plus 0.7720 Cintas shares each. The transaction was unanimously approved by both boards, is backed by a voting agreement covering roughly two-thirds of UniFirst's voting power, and is expected to close in the second half of 2026 subject to shareholder and regulatory approvals. Approval, timing, and the synergy realization are the key things to watch: a successful close consolidates the uniform-rental industry and adds route density, while a regulatory holdup or a higher-than-expected integration cost would weigh on a stock already priced for perfection. Analyst reaction has been split, with Baird upgrading to Outperform and lifting its target to $250 on synergies, while Citi, UBS, Stifel, Goldman, and Truist all trimmed targets on valuation and execution caution.
On the operating calendar, Cintas reports fiscal Q4 2026 results on July 9, 2026, with guidance pointing to roughly $2.87 billion of revenue and EPS near $1.25, completing a fiscal year guided to about 8.4% to 8.7% revenue growth and 10.5% to 11.4% adjusted EPS growth. Q3 already set an all-time-high gross margin of 51.0%, so the question is whether margin and pricing momentum continue. The next earnings print and any UniFirst regulatory milestone are the two events most likely to move the thesis, with the deal carrying more weight than any single quarter.
Sources: Cintas announces UniFirst acquisition (Globe and Mail), Cintas Q3 FY2026 8-K (SEC), Truist cuts CTAS target, stays bullish (Yahoo Finance), How the UniFirst deal reframes CTAS (Yahoo Finance).
Peer Cohorts (Per Segment, With Filing Citations)
Uniform Rental and Facility Services (reported)
- UNF (UNIFIRST CORPORATION)
- (no filing in the citation store)
- ARMK (Aramark)
- (no filing in the citation store)
- ABM (ABM INDUSTRIES INCORPORATED)
- (no filing in the citation store)
First Aid and Safety Services (reported)
- UNF (UNIFIRST CORPORATION)
- (no filing in the citation store)
- VSTS (Vestis Corp)
- (no filing in the citation store)
- ARMK (Aramark)
- (no filing in the citation store)
- ABM (ABM INDUSTRIES INCORPORATED)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.