Analyzing Cintas (CTAS) and Ralph Lauren (RL)

Cintas (NASDAQ: CTAS) and Ralph Lauren (NYSE:RL) are both industrial products companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, institutional ownership, risk, dividends, valuation and earnings.

Institutional and Insider Ownership

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66.4% of Cintas shares are owned by institutional investors. Comparatively, 73.7% of Ralph Lauren shares are owned by institutional investors. 18.9% of Cintas shares are owned by company insiders. Comparatively, 32.9% of Ralph Lauren shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Cintas and Ralph Lauren’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cintas $5.32 billion 3.48 $480.70 million $4.53 38.34
Ralph Lauren $6.65 billion 1.34 -$99.30 million $5.71 19.21

Cintas has higher earnings, but lower revenue than Ralph Lauren. Ralph Lauren is trading at a lower price-to-earnings ratio than Cintas, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Cintas has a beta of 0.9, suggesting that its stock price is 10% less volatile than the S&P 500. Comparatively, Ralph Lauren has a beta of 0.64, suggesting that its stock price is 36% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Cintas and Ralph Lauren, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cintas 1 6 5 1 2.46
Ralph Lauren 4 8 6 0 2.11

Cintas presently has a consensus price target of $166.10, suggesting a potential downside of 4.38%. Ralph Lauren has a consensus price target of $97.20, suggesting a potential downside of 11.40%. Given Cintas’ stronger consensus rating and higher probable upside, analysts plainly believe Cintas is more favorable than Ralph Lauren.

Dividends

Cintas pays an annual dividend of $1.62 per share and has a dividend yield of 0.9%. Ralph Lauren pays an annual dividend of $2.00 per share and has a dividend yield of 1.8%. Cintas pays out 35.8% of its earnings in the form of a dividend. Ralph Lauren pays out 35.0% 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 has increased its dividend for 35 consecutive years. Ralph Lauren is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Cintas and Ralph Lauren’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cintas 11.69% 22.86% 8.54%
Ralph Lauren -1.33% 14.64% 8.39%

Summary

Cintas beats Ralph Lauren on 11 of the 18 factors compared between the two stocks.

Cintas Company Profile

Cintas Corporation provides corporate identity uniforms and related business services primarily in North America, Latin America, Europe, and Asia. It operates through Uniform Rental and Facility Services; First Aid and Safety Services; and All Other segments. The company rents and services uniforms and other garments, including flame resistant clothing, mats, mops and shop towels, and other ancillary items; and provides restroom cleaning services and supplies, and carpet and tile cleaning services, as well as sells uniforms directly. It also offers first aid and safety services, and fire protection products and services. The company offers its products and services through its distribution network and local delivery routes, or local representatives to small service and manufacturing companies, as well as major corporations. Cintas Corporation was founded in 1968 and is based in Cincinnati, Ohio.

Ralph Lauren Company Profile

Ralph Lauren Corporation designs, markets, and distributes lifestyle products worldwide. The company operates in three segments: North America, Europe, and Asia. It offers apparel, including a range of men's, women's, and children's clothing; accessories, which comprise footwear, eyewear, watches, fine jewelry, hats, belts, and leather goods, such as handbags and luggage; home products consisting of bedding and bath products, furniture, fabrics and wallpapers, lightings, paints, tabletops, and giftware; and fragrances. The company sells apparel and accessories under the Ralph Lauren Collection, Ralph Lauren Purple Label, Polo Ralph Lauren, Double RL, Lauren Ralph Lauren, Polo and RLX Golf, Polo Ralph Lauren Children, Chaps, Club Monaco, and other brand names; women's fragrances under the Ralph Lauren Blue, Romance collection, RALPH collection, and Big Pony collection brand names; and men's fragrances under the Safari, Polo Sport, Polo Green, Polo Blue, Polo Blue Sport, Purple Label, Polo Black, Double Black, Big Pony collection, Polo Red collection, and Polo Supreme Oud brands. Its restaurant concepts include The Polo Bar in New York City; RL Restaurant in Chicago; Ralph's in Paris; and Ralph's Coffee concept in London. Ralph Lauren Corporation sells its products to department stores, specialty stores, and golf and pro shops, as well as through its retail stores, concession-based shop-within-shops, and its e-commerce sites. It directly operates 466 retail stores and 619 concession-based shop-within-shops; and operates 105 Ralph Lauren stores, 22 Ralph Lauren concession shops, and 136 Club Monaco stores and shops through licensing partners. Ralph Lauren Corporation was founded in 1967 and is based in New York, New York.

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