Cintas Corp. (NASDAQ:CTAS)

The financial performance indicators over the analyzed period demonstrate notable trends in profitability and leverage.

Return on Assets (ROA)

The ROA shows a consistent upward trajectory from 11.9% in 2019 to 17.14% in 2024. This indicates improved efficiency in using assets to generate earnings, reflecting positively on operational performance and asset management.

Financial Leverage

Financial leverage exhibits a gradual decline from a ratio of 2.48 in 2019 to 2.12 in 2024, with a slight fluctuation in 2022. The overall downward trend suggests a strategic move towards reduced reliance on debt financing, which may contribute to lowering financial risk.

Return on Equity (ROE)

ROE fluctuates during the period but overall increases from 29.47% in 2019 to 36.41% in 2024. There is a peak in 2022 at 37.35%, followed by a modest decline and subsequent rise. This pattern implies enhanced profitability from shareholders' equity, with a peak possibly linked to the temporary leverage increase observed that year.

In summary, the company demonstrates improved asset utilization and profitability measured by ROA and ROE alongside a prudent reduction in financial leverage. These trends suggest strengthening financial health with a growing capacity to generate returns for equity holders while managing debt exposure conservatively.

Net Profit Margin

The net profit margin exhibited a generally positive trend over the period analyzed. It started at 12.84% in May 2019, decreased slightly in 2020 to 12.36%, and then showed consistent improvement from 2021 onwards, reaching 16.38% in May 2024. This indicates increasing profitability relative to sales over time, with the most notable improvement occurring after 2020.

Asset Turnover

The asset turnover ratio experienced some fluctuations but displayed an overall upward trajectory. It began at 0.93 in 2019, dipped marginally to 0.86 in 2021, and then increased steadily to 1.05 by May 2024. This suggests an improvement in the company's efficiency in using its assets to generate sales, particularly in the last three years of the period.

Financial Leverage

Financial leverage showed a declining trend throughout the period. Starting at 2.48 in 2019, it gradually decreased each year to reach 2.12 by May 2024. This reduction implies a decrease in the reliance on debt relative to equity, which could signify a conservative approach to financing and potentially lower financial risk.

Return on Equity (ROE)

Return on equity demonstrated notable variability but with a clear upward movement overall. It was 29.47% in 2019, dipped to 27.08% in 2020, then recovered and increased sharply to 37.35% by 2022. Although a slight decline occurred in 2023, it rose again to 36.41% in 2024. The trend reflects strong and improving returns generated on shareholders' equity over the years, bolstered by enhancements in profitability and operational efficiency.

The financial data over the period from May 31, 2019, to May 31, 2024, exhibits several notable trends in profitability, efficiency, and leverage metrics.

Tax Burden

The tax burden ratio fluctuates slightly but remains relatively stable, starting at 0.8 in 2019, peaking at 0.86 in 2021, and returning to 0.8 by 2023 and 2024. This indicates consistent tax expense management relative to pre-tax earnings across the years.

Interest Burden

This ratio shows a subtle upward trend from 0.92 in 2019 to 0.95 in 2024, suggesting a gradual improvement in managing interest expenses or a reduction in interest burden over time, enhancing earnings retained after interest payments.

EBIT Margin

The EBIT margin demonstrates a consistent increase throughout the period, rising from 17.5% in 2019 to 21.62% in 2024. This upward trend indicates improving operational efficiency and profitability before interest and taxes.

Asset Turnover

The asset turnover ratio initially declines from 0.93 in 2019 to 0.86 in 2021 but then steadily improves to 1.05 by 2024. This pattern suggests an initial decrease in asset utilization efficiency followed by enhanced use of assets to generate revenue in recent years.

Financial Leverage

Financial leverage decreases from 2.48 in 2019 to 2.12 in 2024, reflecting a reduction in reliance on debt financing relative to equity. This decline may indicate a more conservative capital structure or improved equity position over the period.

Return on Equity (ROE)

ROE shows a variable yet generally positive trend, decreasing initially from 29.47% in 2019 to 27.08% in 2020, then increasing markedly to 37.35% in 2022, followed by a slight decrease and stabilization around 36% in 2023 and 2024. Overall, this signifies strong profitability and effective use of equity capital, driven by improvements in operational performance and asset management despite reduced leverage.

Net Profit Margin

The net profit margin shows a generally positive trend over the six-year period. Starting at 12.84% in 2019, it experienced a slight decrease in 2020 to 12.36%, likely reflecting challenges during that year. From 2021 onwards, there is a consistent upward trajectory, reaching a peak of 16.38% in 2024. This indicates improving profitability and enhanced control over costs relative to revenues.

Asset Turnover

Asset turnover exhibits minor fluctuations but an overall upward trend across the years. Beginning at 0.93 in 2019, it dipped slightly in 2020 and 2021 to 0.92 and 0.86 respectively. However, from 2022 onwards, asset turnover increased steadily, reaching 1.05 in 2024. This suggests improved efficiency in utilizing assets to generate sales, with a notable recovery and growth after a dip earlier in the period.

Return on Assets (ROA)

Return on assets followed a pattern of steady improvement throughout the period. After a modest decline from 11.90% in 2019 to 11.42% in 2020, ROA increased consistently every year thereafter. It reached 17.14% in 2024, signifying enhanced overall profitability relative to asset base. The increasing ROA aligns with improvements seen in both net profit margin and asset turnover, reflecting stronger operational effectiveness and asset utilization.

Tax Burden

The tax burden ratio remained relatively stable over the analyzed period, fluctuating between 0.8 and 0.86. It experienced a slight increase from 0.80 in 2019 to a peak of 0.86 in 2021, followed by a return to 0.80 by 2023 and 2024, indicating consistency in tax-related obligations relative to pre-tax profits.

Interest Burden

The interest burden ratio showed a gradual improvement, increasing from 0.92 in 2019 to 0.95 in 2024. This trend suggests enhanced efficiency in managing interest expenses, resulting in a larger proportion of earnings retained after interest payments.

EBIT Margin

The EBIT margin exhibited a positive upward trend, rising from 17.5% in 2019 to 21.62% in 2024. Notably, there was a significant increase between 2020 and 2021, with further steady growth thereafter. This improvement reflects stronger operational profitability and effective cost control measures.

Asset Turnover

Asset turnover demonstrated variability, initially decreasing from 0.93 in 2019 to 0.86 in 2021, followed by a recovery and consistent increase reaching 1.05 by 2024. This suggests that the company initially faced challenges in generating revenue from its asset base but has improved asset utilization efficiency in recent years.

Return on Assets (ROA)

ROA showed a marked improvement over the period, increasing from 11.9% in 2019 to 17.14% in 2024. The rise is attributable to gains in both operational profitability and asset utilization, as indicated by the concurrent increases in EBIT margin and asset turnover. This indicates enhanced overall effectiveness in leveraging company assets to generate net income.

The financial data reveals several noteworthy trends across the analyzed periods.

Tax Burden

The tax burden ratio demonstrates a modest fluctuation over the years. It increased from 0.80 in 2019 to a peak of 0.86 in 2021, indicating a higher proportion of earnings retained after tax in that year. Subsequently, it declined back to 0.80 by 2023 and remained stable at that level in 2024. This suggests a partial reversal to the earlier tax efficiency levels observed in 2019.

Interest Burden

The interest burden ratio shows a gradual, consistent improvement from 0.92 in 2019 to 0.95 in 2024. This upward trend implies a decreasing impact of interest expenses on earnings before tax, reflecting improved management of financing costs or reduced interest expenses relative to earnings.

EBIT Margin

The EBIT margin exhibits a positive, robust growth trajectory across the periods. Starting at 17.5% in 2019, it declined slightly to 16.42% in 2020 but then increased steadily each year, reaching 21.62% in 2024. This improvement indicates enhanced operational efficiency and profitability before interest and taxes.

Net Profit Margin

The net profit margin mirrors the upward trend seen in the EBIT margin, though with slightly more variability. It started at 12.84% in 2019, dipped marginally to 12.36% in 2020, then increased significantly to 15.61% in 2021, peaking at 16.38% in 2024 despite a small decline in 2023. This pattern suggests stronger bottom-line profitability alongside operational gains, despite minor fluctuations possibly due to tax or interest adjustments.

Overall, the data portrays an improving profitability landscape marked by efficient cost and tax management, with both operating earnings and net income margins trending upward over the six-year period.