The official unemployment rate is 4.4% and job growth in the services sector has been prolific. That matters greatly for the U.S. economy and it also matters greatly for Cintas (CTAS 144.23, +8.13, +6.0%), an S&P 500 company that provides products and services that include uniforms, restroom supplies, fire extinguishers, and first aid kits.
After Tuesday's close, Cintas reported its fiscal first quarter results and those results followed form with the strong labor market trends.
Total revenue increased 27.2% to $1.61 billion, paced by a 31.9% jump in revenue to $1.31 billion for its core uniform rental and facility services segment.
That robust growth was attributed to the March acquisition of G&K Services, Inc., yet the underlying strength of Cintas's business was reflected in the impressive organic growth rates for the Uniform Rental and Facility Services (+8.1%) and the First Aid and and Safety Services (+11.9%) reportable operating segments.
The company leveraged that strong sales growth into a strong bottom-line performance, which was punctuated with 16.9% growth in earnings per share from continuing operations of $1.45. The latter was well ahead of analysts' average expectation and enabled the company to boost its guidance for fiscal 2018.
Specifically, Cintas bumped its expected revenue range to $6.325-$6.400 billion from $6.27-$6.36 billion and said it now expects earnings from continuing operations to be between $5.30 and $5.38 versus its prior guidance of $5.15 to $5.25.
The updated earnings guidance range excludes any future transaction and integration expenses related to the acquired G&K business, yet it includes an estimated negative impact of $0.05 to $0.08 per share for the hurricanes affecting Texas, Florida, Puerto Rico and surrounding areas.
In other words, Cintas's fiscal 2018 earnings prospects would have been even better had the hurricanes not happened. That is an added takeaway from the encouraging outlook, which is helping to push shares of CTAS 6.0% higher -- and to a new all-time high -- in the wake of the company's report.