Cintas Corp. (NASDAQ:CTAS)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes demonstrates an overall ascending trend from 2019 through 2024. Starting at approximately $1,006,907 thousand in 2019, there is a slight decline in 2020 to $973,389 thousand, followed by a consistent increase each year thereafter, culminating in $1,624,422 thousand in 2024. This indicates strengthening operational profitability over the analyzed period.

Cost of Capital

The cost of capital has gradually risen from 16.15% in 2019 to 17.24% in 2024. The incremental increases year-over-year suggest a modest rise in the required rate of return or risk profile associated with invested capital during this timeframe.

Invested Capital

Invested capital shows some variability but an overall growth trajectory. Beginning at $6,499,367 thousand in 2019, it slightly decreased in 2020, then increased irregularly through subsequent periods, reaching $7,220,061 thousand in 2024. This suggests continuous reinvestment or expansion of assets supporting operations.

Economic Profit

Economic profit experienced significant improvement from a negative position in 2019 and 2020 (-$42,466 thousand and -$94,588 thousand, respectively) to positive values from 2021 onward. It starts near zero in 2021 ($686 thousand), then rises substantially to $257,987 thousand in 2022, climbing further to $379,495 thousand in 2024. The transition from negative to robust positive economic profit underscores an enhancement in value creation exceeding the cost of capital over time.

Summary of Trends

The data reflects a company improving operational performance and value generation despite a gradually increasing cost of capital. Net operating profits have strengthened consistently after an initial dip. Invested capital has grown moderately, indicative of expanding resource utilization. The leap from negative economic profit in the earlier years to robust positive figures in later years demonstrates effective capital deployment and improved efficiency in generating returns above capital costs.

The financial data reveals notable trends in profitability over the six-year period ending May 31, 2024. Both net income and net operating profit after taxes (NOPAT) demonstrate consistent growth, indicating strengthening financial performance.

Net Income Trends

Net income experienced minor fluctuations in the early years, with a slight decrease from 884,981 thousand USD in 2019 to 876,037 thousand USD in 2020. From 2020 onwards, net income shows a steady upward trajectory, increasing annually to reach 1,571,592 thousand USD by 2024. This upward trend suggests successful operational and revenue enhancements that have contributed to improved bottom-line results.

NOPAT Trends

NOPAT follows a similar pattern but with more pronounced growth. After a slight dip from 1,006,907 thousand USD in 2019 to 973,389 thousand USD in 2020, NOPAT increased significantly each year thereafter, culminating at 1,624,422 thousand USD in 2024. The stronger growth in NOPAT compared to net income may reflect efficiency improvements, effective tax management, or a focus on after-tax operating profitability.

Comparative Insights

Over the period analyzed, the gap between NOPAT and net income widened, indicating that operating profitability net of taxes is improving at a faster rate than net income alone. This could suggest improved operational efficiency or changes in financial structure affecting income components outside operating results.

Overall Pattern

The data illustrates resilience and gradually accelerating profitability growth following 2020, which may correspond with recovery or strategic initiatives undertaken by the company. The consistent upward movement in these key profitability metrics over multiple years points toward a robust and improving financial profile.

The financial data demonstrates a noticeable upward trend in income tax expense over the six-year period. Starting at approximately $220 million in 2019, the tax expense decreased slightly in the following two years, reaching a low point of around $177 million in 2021. From 2021 onwards, however, there is a significant increase, peaking at just over $400 million in 2024. This reflects a substantial rise in tax obligations in the most recent years.

Similarly, cash operating taxes exhibit a consistent increase throughout the period. Beginning at about $208 million in 2019, the cash operating taxes experienced a progressive growth, with a minor dip in 2022 around $231 million, followed by a sharp rise in subsequent years. By 2024, cash operating taxes peaked at approximately $454 million, more than doubling the starting figure.

Income Tax Expense

Initial decline from 2019 to 2021, followed by a strong upward trajectory through 2024.

Cash Operating Taxes

Consistent growth with a slight fluctuation in 2022, culminating in a substantial increase by 2024.

Overall Trends

Both income tax expense and cash operating taxes show marked increases over the analyzed period, especially from 2021 onward, indicating rising tax burdens which may reflect higher taxable income or changes in tax rates or regulations.

The financial data over the six-year period reveals several notable trends in the company's capital structure and financial position.

Total reported debt & leases

Debt levels exhibit some fluctuations but generally show a decreasing trend from 2019 through 2024. The total reported debt decreased from approximately $3.05 billion in 2019 to around $2.67 billion in 2024, with the highest value observed in 2019 and a notable decline by 2020. Debt levels increased slightly during 2021 and 2022 but again decreased in subsequent years.

Shareholders’ equity

Shareholders’ equity increases consistently over the period, reflecting growth in net assets attributable to shareholders. It rose from about $3.00 billion in 2019 to approximately $4.32 billion in 2024, with a significant rise between 2019 and 2021, followed by some variability but an overall upward trajectory through to 2024. This suggests strengthening financial stability and retained earnings growth.

Invested capital

The invested capital, representing the total amount of capital invested in the company's operations, experiences moderate growth. Starting at roughly $6.50 billion in 2019, it remains relatively stable through 2020 but then steadily increases to about $7.22 billion by 2024. This gradual growth indicates continued investment in business assets or operations, supporting expansion or enhancement efforts.

Overall, the data indicates that the company has been managing its debt prudently while enhancing its equity base and overall capital investment. This pattern implies a strengthening balance sheet and potentially a lower financial risk profile over the analyzed period.

Economic Profit

The economic profit displayed a negative trend from May 31, 2019, through May 31, 2020, with a significant increase in losses from -42,466 thousand to -94,588 thousand US dollars. From May 31, 2021 onwards, the company experienced a notable turnaround, achieving positive economic profit starting at 686 thousand US dollars, which further increased substantially to 257,987 thousand in 2022, continuing an upward trajectory to 379,495 thousand by May 31, 2024.

Invested Capital

Invested capital exhibited relatively stable behavior with slight fluctuations across the periods. Starting at around 6.5 billion US dollars in 2019 and 2020, it peaked at approximately 6.74 billion in 2021, followed by a slight decrease in 2022. From that point, the invested capital resumed growth, reaching over 7.22 billion US dollars by May 31, 2024. Overall, the invested capital showed a moderate upward trend over the six-year span.

Economic Spread Ratio

The economic spread ratio, which measures the return relative to the cost of capital, was negative in 2019 and 2020, reflecting inefficiencies in capital utilization during these years. It improved from nearly zero in 2021 to a significantly positive value of 3.91% in 2022. This positive trend continued, with the ratio increasing to 4.39% in 2023 and reaching 5.26% in 2024. This indicates progressively improving profitability and more effective use of invested capital over the recent years.

Summary Insights

Overall, the data reveals a strong recovery and progressive growth from a period of economic losses. The company’s economic profit and economic spread ratio improvements suggest enhanced operational efficiency and capital productivity. The stable but gradually increasing invested capital base supports these positive profitability trends, indicating sound capital allocation strategies and robust financial health over the analyzed periods.

Revenue Trend

The revenue shows a consistent upward trend over the six-year period. Starting at approximately 6.89 billion USD in May 2019, it gradually increased each year, reaching nearly 9.60 billion USD by May 2024. This reflects a steady growth in the company's top-line performance.

Economic Profit Development

Economic profit has exhibited significant improvement. Initially, the company experienced substantial economic losses, with negative values of about -42.5 million USD in 2019 and a deeper loss of nearly -94.6 million USD in 2020. However, from 2021 onwards, economic profit turned positive and increased substantially, reaching 379.5 million USD by 2024. This shift indicates a meaningful turnaround in profitability beyond accounting profits, considering the cost of capital.

Economic Profit Margin Behavior

The economic profit margin mirrors the changes in economic profit. It started with negative margins of -0.62% in 2019 and further declined to -1.34% in 2020. From 2021 forward, the margin turned slightly positive at 0.01%, then rose sharply in the following years to 3.28% in 2022, 3.41% in 2023, and 3.95% in 2024. This indicates enhanced efficiency and value creation relative to revenue.

Overall Insights

The data suggests that despite initial challenges leading to negative economic profits and margins, the company has successfully improved both revenue and economic profitability. The positive trend in economic profit margin alongside revenue growth indicates effective management of costs and capital, resulting in increasing value generation over the analyzed period.