Cintas Corp. has agreed to purchase rival UniFirst Corp. in an all-cash transaction valued between $5.2 billion and $5.5 billion, a move that requires Federal Trade Commission clearance. The acquisition follows a decade in which Cintas shares outperformed the S&P 500, driven by a shift from uniform rental to a broader portfolio of business services.

Cintas operates a route-based, recurring-revenue model that serves more than one million businesses. The company supplies uniforms, floor mats, restroom supplies, first-aid cabinets, and fire extinguishers. Management states that over two-thirds of new business comes from companies that previously handled these tasks themselves. The firm estimates its addressable market at 16 to 20 million businesses.

Financial results reflect this expansion. In fiscal Q1 2027, Cintas reported its first quarter with $3 billion in revenue. Gross margin reached an all-time high of 51.5%, and operating margin hit a record 23.6%. The company split its stock 4-for-1 in September 2024. The dividend has increased every year since Cintas went public 43 years ago, with the most recent raise of 15.6% setting the payout at $0.52 per quarter.

Cintas shares have beaten the S&P 500 over one-year, five-year, and ten-year periods. These figures are adjusted for splits and dividends for Cintas, while the S&P 500 figures reflect price change only. Over the past year, timing influenced returns significantly. Shares traded between $160.31 and $225.79. In the month following the September earnings report, Cintas stock rose 17.57%, whereas the S&P 500 declined 0.4%.

The company has exceeded EPS estimates for seven consecutive quarters. Management attributes growth to volume rather than pricing and has set fiscal 2027 adjusted EPS guidance of $5.45 to $5.54. The UniFirst deal adds integration risk to this trajectory.

Valuation presents a counterpoint to the long-term growth story. At $225.70, shares trade near 36 times forward earnings and 44 times trailing earnings. This stands above the average analyst target of $218.31. Because uniform rental tracks employment, a hiring slowdown could impact volumes as Cintas integrates UniFirst.