Head-To-Head Analysis: Cintas Corporation (CTAS) & Alliance Data Systems Corporation (ADS)

Cintas Corporation (NASDAQ: CTAS) and Alliance Data Systems Corporation (NYSE:ADS) are both large-cap industrial products companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, institutional ownership, risk, analyst recommendations, dividends, valuation and profitability.

Volatility & Risk

Cintas Corporation has a beta of 0.86, suggesting that its stock price is 14% less volatile than the S&P 500. Comparatively, Alliance Data Systems Corporation has a beta of 1.75, suggesting that its stock price is 75% more volatile than the S&P 500.

Earnings & Valuation

This table compares Cintas Corporation and Alliance Data Systems Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Cintas Corporation $5.67 billion 2.79 $1.12 billion $5.08 29.35
Alliance Data Systems Corporation $7.41 billion 1.69 $1.47 billion $8.78 25.77

Alliance Data Systems Corporation has higher revenue and earnings than Cintas Corporation. Alliance Data Systems Corporation is trading at a lower price-to-earnings ratio than Cintas Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Cintas Corporation and Alliance Data Systems Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cintas Corporation 9.79% 23.71% 9.70%
Alliance Data Systems Corporation 6.77% 59.67% 3.74%

Dividends

Cintas Corporation pays an annual dividend of $1.33 per share and has a dividend yield of 0.9%. Alliance Data Systems Corporation pays an annual dividend of $2.08 per share and has a dividend yield of 0.9%. Cintas Corporation pays out 26.2% of its earnings in the form of a dividend. Alliance Data Systems Corporation pays out 23.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Cintas Corporation has increased its dividend for 34 consecutive years. Alliance Data Systems Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of current ratings and price targets for Cintas Corporation and Alliance Data Systems Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cintas Corporation 1 7 2 0 2.10
Alliance Data Systems Corporation 3 7 8 0 2.28

Cintas Corporation presently has a consensus target price of $139.88, indicating a potential downside of 6.17%. Alliance Data Systems Corporation has a consensus target price of $252.33, indicating a potential upside of 11.54%. Given Alliance Data Systems Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe Alliance Data Systems Corporation is more favorable than Cintas Corporation.

Insider & Institutional Ownership

64.8% of Cintas Corporation shares are held by institutional investors. Comparatively, 96.0% of Alliance Data Systems Corporation shares are held by institutional investors. 18.9% of Cintas Corporation shares are held by insiders. Comparatively, 2.6% of Alliance Data Systems Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Alliance Data Systems Corporation beats Cintas Corporation on 11 of the 17 factors compared between the two stocks.

About Cintas Corporation

Cintas Corporation is a provider of corporate identity uniforms through rental and sales programs, as well as a provider of related business services, including entrance mats, restroom cleaning services and supplies, carpet and tile cleaning services, first aid and safety services and fire protection products and services. Its segments include uniform rental and facility services, and first aid and safety services. Its uniform rental and facility service segment offers services, which include rental and servicing of uniforms and other garments, including flame resistant clothing, mats, mops and shop towels, and other ancillary items. Its first aid and safety service segment offers services, which include first aid and safety products and services. Rental processing plants, rental branches, first aid and safety facilities, fire protection facilities, direct sales offices, distribution centers and manufacturing facilities are all utilized by the businesses included in All Other.

About Alliance Data Systems Corporation

Alliance Data Systems Corporation is a provider of data-driven marketing and loyalty solutions serving consumer-based businesses in a range of industries. The Company offers a portfolio of integrated outsourced marketing solutions, including customer loyalty programs, database marketing services, end-to-end marketing services, analytics and creative services, direct marketing services, and private label and co-brand retail credit card programs. The Company operates through three segments: LoyaltyOne, which provides coalition and short-term loyalty programs through the Company’s Canadian AIR MILES Reward Program and BrandLoyalty Group B.V. (BrandLoyalty); Epsilon, which provides end-to-end, integrated direct marketing solutions, and Card Services, which provides risk management solutions, account origination, funding, transaction processing, customer care, collections and marketing services for the Company’s private label and co-brand retail credit card programs.

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