By Peet Serfontein & Khumbulani Kunene
We initiate a long position with a target price of $241.00 and a stop-loss of $192.00.
Cintas Corporation designs, manufactures, and provides a comprehensive suite of products and solutions including uniform rentals and facility services as well as work apparel, entrance mats, restroom supplies, promotional products, document management, and first aid and safety services.
Cintas serves a broad range of industries such as hospitality, healthcare, and manufacturing. The company provides products and services to over one million businesses of all types and sizes through ~480 facilities in ~345 cities. Cintas also offers flame-resistant clothing, mats, mops, shop towels, and other ancillary items.
Technically, a bullish pennant pattern presents a promising investment opportunity (see the insert on the main chart). This pattern highlights a brief consolidation phase within a prevailing uptrend, often preceding a continuation of the upward move. This pattern typically forms after a strong price rally, where the stock enters a narrow, symmetrical consolidation range resembling a small triangle or pennant. Once the price breaks above the upper boundary of the pennant with increased volumes, it often triggers a fresh leg higher, buoyed by renewed buying interest.
A strong and persistent bullish trend also supports the investment case for the stock (see the notation on the main chart). This trend reflects sustained investor confidence and consistent demand over time, and is characterised by higher highs and higher lows, indicating that buyers are firmly in control. Increasing volumes and supportive technical indicators enhance the credibility of upward momentum while attracting institutional investors and momentum traders.
Fading downside price momentum per the MACD histogram, as well as the upward trajectory of the on-balance volume (OBV) indicator supports our bullish view.
| Share Information | |
|---|---|
| Share Code | CTAS |
| Industry | Commercial & Professional Services |
| Market Capital (USD) | 83.12 billion |
| One Year Total Return | 24.52% |
| Return Year-to-Date | 12.88% |
| Current Price (USD) | 206 |
| 52 Week High (USD) | 228 |
| 52 Week Low (USD) | 162 |
| Financial Year End | May |
| The price is hovering around its 200-day simple moving average (SMA), reflecting both short- and long-term strength in the stock. | |
| Consensus Expectations (Bloomberg) | ||||
|---|---|---|---|---|
| FY24 | FY25E | FY26E | FY27E | |
| Headline Earnings per Share (USD) | 3.79 | 4.38 | 4.84 | 5.37 |
| Growth (%) | 15.62 | 10.55 | 10.89 | |
| Dividend Per Share (USD) | 1.35 | 1.54 | 1.67 | 2.37 |
| Growth (%) | 13.93 | 8.71 | 41.45 | |
| Forward PE (times) | 47.01 | 42.52 | 38.35 | |
| Forward Dividend Yield (%) | 0.75 | 0.81 | 1.15 | |
| The company is set to see double-digit growth in earnings as well as solid dividend growth in the short to medium term. | ||||
Buy/Sell Rationale:
Technical Analysis:
Fundamental view
| Share Name and Position | PANW US - Buy (Continue to hold) |
STE US - Time Exit (Close the position) |
|---|---|---|
| Entry | 173.55 | 217.20 |
| Current | 173.55 | 218.78 |
| Movement | 0.0% | +0.7% |
|
The recent trough in the stock's price continues to attract attention. It remains positioned above its 200-day SMA. Fading downside price momentum is supportive.
Our profit target remains at $228.00 with a trailing stop-loss at $152.00. Exit the trade around 25 June 2025. |
The trade reached its time exit date and we opted to close the position. |
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