Cintas: The Multi-Billion-Dollar Empire Built on Old Rags

Cintas (CTAS) transformed from a rag-cleaning business into a leader in uniform rental and facility services. With $9.6 billion in annual revenue, strong profitability, and a rising stock price, is Cintas still a good investment despite its high valuation? More from EasyAssetManagement's recent report.

• Cintas reported $9.6 billion in revenue and $1.57 billion in net income in 2024. It dominates the uniform rental and facility services industry, serving over a million clients.
•  The stock is up 10.34% YTD but trades at a premium (P/E of 48.66). Despite strong financials, concerns over pricing power and valuation persist.
• Defensive Investment Theme: With stable revenue, high margins, and a strong balance sheet, Cintas fits well in defensive portfolios. EasyAssetManagement is monitoring it under the Onshoring/Defence theme.
  
  

Cintas Corporation is a literal rags-to-riches tale, with its origins tracing back to 1929. The company began as a small business salvaging old rags, cleaning them, and selling them to factories. Founder Richard T. Farmer later innovated by renting these rags to customers, picking up the dirty ones, cleaning them, and returning them to factories. This approach laid the foundation for what Cintas has become today: a leader in route-based business services, serving over one million clients. In 2024, the company reported $9.6 billion in annual revenue, $1.57 billion in net income, and has a current market capitalization exceeding $81 billion.

Cintas is best known for its uniform rental services but also offers a variety of other business solutions, including fire protection, first aid and safety products, and facility services. The company operates around 480 facilities across 345 cities, serving businesses of all types and sizes. In addition to uniforms, Cintas provides flame-resistant and other highly specialised clothing, mats, mops, shop towels, and other ancillary items.



Operations:
Headquartered in Cincinnati, Ohio, Cintas operates around 480 facilities, including five manufacturing plants and multiple distribution centres, across 345 cities. It runs over 11,700 local delivery routes and serves customers primarily in the U.S. (90% of revenue), with additional operations in Canada and Latin America. 


Cintas operates through three primary business segments, each contributing to the company's overall growth and success.

1. Uniform Rental and Facility Services:
This segment accounts for nearly 78% of the company’s revenue. It includes the rental and servicing of uniforms and garments, such as flame-resistant clothing, mats, mops, and shop towels. Additionally, this segment offers restroom cleaning services, supplies, and the sale of catalogue items to customers. 

Cintas' competitive edge stems from its network density, operational scale, and ability to cross-sell services, driving consistent revenue growth and an increasing revenue per route. Its size also grants significant purchasing advantages, further reinforcing its industry leadership.

However, the stock is richly valued, trading at a price-to-earnings (P/E) ratio of 48.66, well above industry peers. Despite strong performance, the stock experienced a decline at the end of last year, potentially due to weaker direct uniform sales or concerns over pricing power. Management has acknowledged the challenge of sustaining price increases, with CEO Todd Schneider stating in the Q2 2025 earnings call, “With decreasing inflation, it’s very reasonable to think that price increases will come down as well.” The dip could also reflect a natural correction toward more reasonable valuation multiples.

Despite a 10.34% year-to-date rally, Cintas shares currently trade at $201.60, well below their 52-week high of $228.12.

At EasyAssetManagement, we follow a thematic style of investing. While we do not currently hold a position in Cintas, we are actively monitoring it as part of our Onshoring/Defence theme. Given its strong business model and defensive characteristics, Cintas would be a suitable candidate for a defensive portfolio.

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