Morgan Stanley Reports Cintas Commodity Prices A Concern For FY12

In a report published by Morgan Stanley, Cintas Corporation CTAS commodity prices are a concern for FY12. Cintas Corporation said that EPS of $0.41 was four cents above its estimate and five cents above consensus due to higher than expected organic growth and tight cost control. “While the top line continues to recover, demand was driven almost entirely by new accounts while existing clients remain reluctant to add employees. Revised fourth quarter guidance, appears conservative but management points out that higher energy prices could negatively impact both margins and customer demand. While higher cotton prices have not yet materially impacted results due to existing fabric stockpiles and gradual cost amortization, they are likely to in FY12, and management deflected numerous questions on this during the call, preferring to wait until July. The balance sheet remains strong, but the company continues to favor M&A and investments in new initiatives. CTAS repurchased no shares during the quarter, in contrast to the $200 mn worth bought back during the first half of the fiscal year.” Cintas Corporation closed yesterday at $28.14.