Cintas (Cintas) Predictability Rank

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What is Cintas Predictability Rank?

Warren Buffett said many times that the companies he likes are:

1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.

It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.

GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.

Cintas Predictability Rank Calculation

In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.

Our study may be subject to these biases and assumptions:

Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.

The correlation between business predictability and investment returns of a company is showed below.

Correlation Between Business Predictability and Investment Returns

	Predictables	Non-Predictable	All stocks
Total Number of stocks	570	1833	2403
Total Lost Money	61	830	891
Total Lost More Than 50%	18	412	430
Total Lost More Than 90%	4	86	90
Average Gain	260.6%	100.0%	138.1%
Median Gain	150.0%	13.0%	39.0%
Maximum Gain	2852.0%	11483.0%	11483.0%
Maximum Loss	-100.0%	-100.0%	-100.0%
Annualized Average Gain	12.7%	6.7%	8.4%
Annualized Median Gain	8.9%	1.1%	3.1%

For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.

Predictability Rank	5-Star	4.5-Star	4-Star	3.5-Star	3-Star	2.5-Star	2-Star	1-Star (non-predictable)	Average among all
% Out of All 2403 Stocks	3.3%	2.9%	3.7%	3.3%	3.3%	3.7%	3.3%	76.3%	100%
% that are in Loss (10y)	3%	10%	8%	9%	11%	18%	16%	45%	37%
Average Gain (10y)	364.6%	330.9%	278.0%	235.1%	243.5%	227.8%	154.8%	100.0%	138.1%
Median Gain (10y)	238.5%	193.5%	171.0%	159.0%	132.5%	113.5%	87.0%	13.0%	39.0%
Maximum Gainer	2228.0%	2547.0%	2452.0%	2852.0%	2432.0%	1892.0%	1807.0%	11483.0%	11483.0%
Maximum Loser	-82.0%	-53.0%	-67.0%	-100.0%	-83.0%	-100.0%	-78.0%	-100.0%	-100.0%
Annualized Average Gain	15.4%	14.6%	13.2%	12.0%	12.2%	11.7%	9.1%	6.7%	8.4%
Annualized Median Gain	12.1%	10.6%	9.8%	9.3%	8.2%	7.3%	6.0%	1.1%	3.1%

For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank

Cintas Predictability Rank Related Terms

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Cintas (Cintas) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Business Services » Cintas Corp (NAS:CTAS) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

CTAS:Mexico CIT:Germany CIT:Germany CTAS:Austria

Address

6800 Cintas Boulevard, P.O. Box 625737, Cincinnati, OH, USA, 45262-5737

Website

https://www.cintas.com

Cintas is positioned as a one-stop shop that rents/sells uniforms and ancillary products and services, such as mops, first aid kits, and fire inspections. In its core uniform and facility services unit (a majority of sales), Cintas provides uniform rental programs for items including office attire, custom-tailored apparel, flame-resistant clothing, lab coats, and other profession-specific clothing. Facilities products generally include the rental and sale of entrance mats, mops, shop towels, hand sanitizers, and restroom supplies. Cintas' remaining businesses include first aid and safety services, fire protection services, and uniform direct sales.

Executives

J. Michael Hansen	officer: VP & CFO	6800 CINTAS BOULEVARD, CINCINNATI OH 45262-5737
Ronald W Tysoe	director	C/O MACY'S, INC., 7 WEST SEVENTH STREET, CINCINNATI OH 45202
Robert E. Coletti	director, officer: Assistant Secretary	P.O. BOX 625737, 6800 CINTAS BLVD., CINCINNATI OH 45262
Melanie W. Barstad	director	P.O. BOX 625737, MASON OH 45040
David Brock Denton	officer: Sr VP, Secretary & Gen Counsel	P.O. BOX 625737, CINCINNATI OH 45262
John F Barrett	director
Michael Lawrence Thompson	officer: Executive Vice President & CAO	6800 CINTAS BOULEVARD, P.O. BOX 625737, CINCINNATI OH 45262
Todd M. Schneider	director, officer: CEO and Director	P.O. BOX 625737, 6800 CINTAS BOULEVARD, CINCINNATI OH 45262
Joseph Scaminace	director	C/O THE SHERWIN WILLIAMS CO, 101 PROSPECT AVE N W, CLEVELAND OH 44115
Gerald S Adolph	director	101 PARK AVENUE, ROOM 2005, NEW YORK NY 10178
Jim Rozakis	officer: Executive Vice President & COO	6800 CINTAS BLVD, CINCINNATI OH 45262
Martin Mucci	director	911 PANORAMA TRAIL S, ROCHESTER NY 14625
Thomas E Frooman	officer: VP, Secretary & Gen. Counsel
James J Johnson	director	C/O THE PROCTER & GAMBLE COMPANY,, ONE PROCTER & GAMBLE PLAZA, CINCINNATI OH 45202
James Phillip Holloman	officer: President and COO	P.O. BOX 625737, 6800 CINTAS BOULEVARD, CINCINNATI OH 45262