Cintas Sees Third-Quarter Earnings Drop 32 Percent

Posted Mar 19th 2010 10:50AM by Mark Fightmaster
Filed under: Earnings Reports, Cintas Corp (CTAS)

After the closing bell Thursday, Cincinnati-based Cintas (CTAS) announced that its third-quarter net income dropped to 32 cents per share from 47 cents per share a year ago.

The firm blamed the drop on weak demand for work uniforms, which Cintas produces. Quarterly revenue totaled $861.8 million, down 5.2% from the prior year. Expectations called for Cintas to earn 30 cents per share. Looking ahead, the company reiterated its fourth-quarter earnings outlook of 30 to 34 cents per share.

Since the middle of February, shares of Cintas have marched from the $23.50 region to the $27.50 region. We could see $27.50 step up to provide support in the wake of Thursday's results. Even if $27.50 fails, the $27 level could provide support, as it acted as resistance in the past and could switch roles.

That said, the road higher isn't clear for CTAS. The stock faces resistance from its 50-month moving average. The last time the shares finished a month atop this trendline was back in late 2006/early 2007. The good news is that the stock will have to rally into the $30 region before hitting this potential resistance, leaving the stock a bit of room to run.

Tags: Cintas, CTAS, earnings, inthenews, uniforms