Stock Deep Dive: Captain Compounder

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Let’s get into the analysis of a great stock we’ve been watching: 👇

Stock Deep Dive: Cintas (CTAS-US, $62B MCAP)

This week’s issue is another boring compounder.

But you want to know what’s not boring? A 28% annual return over the last five years.

This company sells uniforms, entrance mats, restroom cleaning products, first aid supplies, and fire safety products. There is no artificial intelligence here- just actual intelligence when executing a well-integrated essential service.

Cintas takes a chapter from the book of vertical integration. By owning several components of the value-add chain, they can increase margin, improve quality control, and dominate their market as a trusted brand.

Since you’ve already got your dose of high-tech earnings last week, let’s kick it old school this week and dive into another classic compounder.

This is an equal case of “What the hell was I missing about this company 5 years ago?” and “Where do we go from here?”. Let’s explore!

• Overview 👉 What Does Cintas Do?

• How Do They Win? 👉 Value Proposition

• How Do They Make Money? 👉 Primarily Uniform Rental + Facility Services

• Key Channels 👉 Distribution, Distribution, Distribution

• By The Numbers 👉 Key Metrics

• Risks 👉 Potential Pitfalls

Overview 👉 What Does Cintas Do?

Cintas helps customers get “Ready for the Workday®” with products and services, including uniforms, mats, mops, restroom supplies, first aid and safety products, fire extinguishers and testing, and safety training.

Founded in 1968, Cintas is North America’s leading provider of corporate identity uniforms through rental and sales programs and has 475 facilities across 40 cities, generating around 90% of revenue from US operations.

The company has two segments: Uniform Rental & Facility Services and First Aid & Safety Services.

Uniform Rental and Facility Services, which accounts for nearly 80% of the company's revenue, consists of the rental and servicing of uniforms and other garments, including flame-resistant clothing, mats, mops, shop towels, and other ancillary items. In addition to these rental items, it provides restroom cleaning services and supplies, and the sale of items from its catalogs to its customers on route are included within this reportable operating segment.

First Aid and Safety Services, which accounts for over 10% of revenue, comprises first aid and safety products and services.

The remainder of Cintas' businesses (over 10% of revenue) consist primarily of Fire Protection Services and its Uniform Direct Sale business.

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