Should You Invest in Cintas?

PHOTO CREDIT: Cintas

OVERVIEW

Cintas Corporation is an industrial services company based in the United States which offers business related services around the world. They provide companies with uniforms and other clothing items, cleaning supplies and services, as well as safety equipment and services. The company was founded in 1968.

Why You Should?

  1. Cintas Corporation has seen a spike in demand for its cleaning services during this pandemic as companies look for improved deep cleaning solutions to prevent the spread of the COVID-19 virus in the workplace. This increase in demand for cleaning services has benefited the company’s financial results as well as their stock price.
  2. A stronger economy is returning after bottoming out earlier this year due to the impacts of the pandemic. Cintas is an industrials company which tend to perform better during times of strong economic growth. As this pandemic comes to an end and as the economy returns to growth, Cintas will see stronger demand across all of its services, which will benefit the company’s stock price.
  3. Cintas offers a wide range of products and solutions to its customers all over the world. They offer everything from cleaning supplies to safety supplies and solutions as well as uniform products and solutions. Because of this, they will always have some demand for the products that they offer, which will help keep their sales stable during tough economic times.
  4. Cintas has seen rising revenues and profits over the past couple of financial years due to the reasons mentioned above. This will help the company build a stronger balance sheet which will help it grow around the world. This will benefit the company and the company’s stock price. in the financial year of 2020, the company reported revenues of around 7.1 billion and profits of around 876 million. In the financial year of 2019, the company reported a lower revenue stream at around 6.9 billion but slightly higher profits of around 885 million.
PHOTO CREDIT: Yahoo Finance

Why You Should Not?

  1. Cintas faces tough competition from other companies who offer directly competing products to the ones that Cintas offers. Some of the these companies include Aramark, Ecolab, and many others. This might hurt the company in the future.
  2. The COVID-19 Pandemic has decimated economies around the world. This has led to a drop in demand for the products that Cintas has to offer due to the weak economies. Though this was limited, the COVID-19 Pandemic has led to an increase in costs for the company as well. All of these factors have impacted the company’s sales.
  3. Cintas offers its products to small business operators, like restaurants and other small businesses. This pandemic has led to small businesses shift to an online platform, a place where operators do not need cleaning, safety, and uniform solutions. A closure of small businesses have also hurt the company’s future growth.

MY OPINION

I think that Cintas is a great long-term investment due to the limited impacts of the COVID-19 Pandemic, a stronger economy, a wide range of products, and rising revenues and profits. However, strong competition, impacts from the COVID-19 Pandemic, and the fall of small businesses might hurt the company in the short to mid-term.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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