Cintas Corp. (NASDAQ:CTAS)

Net Operating Profit After Taxes (NOPAT)

The NOPAT demonstrated a generally upward trend from 2019 to 2024. Starting at approximately 1.01 billion in 2019, it experienced a slight dip in 2020 before increasing continuously each subsequent year, reaching about 1.62 billion by 2024. This progression reflects improving operating profitability over the period.

Cost of Capital

The cost of capital exhibited a gradual increase across the years, moving from 16.14% in 2019 up to 17.23% in 2024. This steady rise indicates an increase in the required return or risk premium associated with the company’s invested capital.

Invested Capital

Invested capital showed moderate growth over the period. After a slight decrease in 2020, the invested capital rose overall, going from approximately 6.5 billion in 2019 to 7.22 billion in 2024. This suggests ongoing investment or asset buildup despite some yearly fluctuations.

Economic Profit

Economic profit started negative in 2019 at around -42 million and worsened in 2020 to nearly -94 million, reflecting an underperformance relative to capital costs. However, from 2021 onward, economic profit turned positive and increased substantially each year, reaching approximately 380 million by 2024. This positive shift indicates a significant improvement in value creation beyond the cost of capital over the last four years.

The financial data reveals notable trends in profitability over the six-year period ending May 31, 2024. Both net income and net operating profit after taxes (NOPAT) demonstrate consistent growth, indicating strengthening financial performance.

Net Income Trends

Net income experienced minor fluctuations in the early years, with a slight decrease from 884,981 thousand USD in 2019 to 876,037 thousand USD in 2020. From 2020 onwards, net income shows a steady upward trajectory, increasing annually to reach 1,571,592 thousand USD by 2024. This upward trend suggests successful operational and revenue enhancements that have contributed to improved bottom-line results.

NOPAT Trends

NOPAT follows a similar pattern but with more pronounced growth. After a slight dip from 1,006,907 thousand USD in 2019 to 973,389 thousand USD in 2020, NOPAT increased significantly each year thereafter, culminating at 1,624,422 thousand USD in 2024. The stronger growth in NOPAT compared to net income may reflect efficiency improvements, effective tax management, or a focus on after-tax operating profitability.

Comparative Insights

Over the period analyzed, the gap between NOPAT and net income widened, indicating that operating profitability net of taxes is improving at a faster rate than net income alone. This could suggest improved operational efficiency or changes in financial structure affecting income components outside operating results.

Overall Pattern

The data illustrates resilience and gradually accelerating profitability growth following 2020, which may correspond with recovery or strategic initiatives undertaken by the company. The consistent upward movement in these key profitability metrics over multiple years points toward a robust and improving financial profile.

The financial data demonstrates a noticeable upward trend in income tax expense over the six-year period. Starting at approximately $220 million in 2019, the tax expense decreased slightly in the following two years, reaching a low point of around $177 million in 2021. From 2021 onwards, however, there is a significant increase, peaking at just over $400 million in 2024. This reflects a substantial rise in tax obligations in the most recent years.

Similarly, cash operating taxes exhibit a consistent increase throughout the period. Beginning at about $208 million in 2019, the cash operating taxes experienced a progressive growth, with a minor dip in 2022 around $231 million, followed by a sharp rise in subsequent years. By 2024, cash operating taxes peaked at approximately $454 million, more than doubling the starting figure.

Income Tax Expense

Initial decline from 2019 to 2021, followed by a strong upward trajectory through 2024.

Cash Operating Taxes

Consistent growth with a slight fluctuation in 2022, culminating in a substantial increase by 2024.

Overall Trends

Both income tax expense and cash operating taxes show marked increases over the analyzed period, especially from 2021 onward, indicating rising tax burdens which may reflect higher taxable income or changes in tax rates or regulations.

The financial data over the six-year period reveals several notable trends in the company's capital structure and financial position.

Total reported debt & leases

Debt levels exhibit some fluctuations but generally show a decreasing trend from 2019 through 2024. The total reported debt decreased from approximately $3.05 billion in 2019 to around $2.67 billion in 2024, with the highest value observed in 2019 and a notable decline by 2020. Debt levels increased slightly during 2021 and 2022 but again decreased in subsequent years.

Shareholders’ equity

Shareholders’ equity increases consistently over the period, reflecting growth in net assets attributable to shareholders. It rose from about $3.00 billion in 2019 to approximately $4.32 billion in 2024, with a significant rise between 2019 and 2021, followed by some variability but an overall upward trajectory through to 2024. This suggests strengthening financial stability and retained earnings growth.

Invested capital

The invested capital, representing the total amount of capital invested in the company's operations, experiences moderate growth. Starting at roughly $6.50 billion in 2019, it remains relatively stable through 2020 but then steadily increases to about $7.22 billion by 2024. This gradual growth indicates continued investment in business assets or operations, supporting expansion or enhancement efforts.

Overall, the data indicates that the company has been managing its debt prudently while enhancing its equity base and overall capital investment. This pattern implies a strengthening balance sheet and potentially a lower financial risk profile over the analyzed period.

Economic Profit

Over the six-year period, economic profit demonstrated a significant shift from negative to positive values. Initially, it was deeply negative, with substantial losses recorded in 2019 and 2020. Starting in 2021, the economic profit turned positive and showed a strong upward trend, culminating in a considerable increase in 2023 and 2024. This indicates an improving ability to generate returns exceeding the cost of capital over time.

Invested Capital

The invested capital remained fairly stable from 2019 through 2020 with a slight decline. From 2021 onward, it experienced a gradual increase each year, which suggests moderate expansion or reinvestment in the company’s operations or assets. The overall change reflects steady growth in the assets deployed for generating economic profit.

Economic Spread Ratio

This ratio showed a notable improvement from negative levels in 2019 and 2020 to positive and increasing values starting 2021. The spread moved from a negative performance indicating returns below the cost of capital, to increasingly favorable percentages surpassing the cost of capital. The continuous rise through 2024 signals improving efficiency and value creation in the invested capital base over the years analyzed.

Overall Analysis

The data reflect a turnaround and strengthening in financial performance over the observed timeframe. The transition from negative economic profit and spread ratio to significant positive growth aligns with growing invested capital, suggesting effective strategic or operational initiatives enhancing value generation. The consistent improvement in economic profit and spread ratio from 2021 forward underscores a successful recovery and robust financial health development.

Revenue

Revenue shows a consistent increasing trend over the six-year period. It rose from approximately $6.89 billion in 2019 to nearly $9.60 billion in 2024, indicating steady organic growth or expansion activities. The growth accelerated notably from 2021 onward, with revenue increasing from $7.12 billion to $9.60 billion by 2024.

Economic Profit

The economic profit experienced significant fluctuations from 2019 to 2024. Initially, it was negative in both 2019 and 2020, reflecting economic losses of -$41.9 million and -$94.0 million, respectively. In 2021, there was a turnaround as economic profit turned positive at about $1.3 million. This positive trend accelerated sharply from 2022, reaching $380.2 million in 2024, demonstrating a substantial improvement in value creation above the cost of capital.

Economic Profit Margin

The economic profit margin mirrored the changes in economic profit. It was negative in 2019 (-0.61%) and 2020 (-1.33%), showing that the company was not generating returns above its cost of capital relative to revenue during those years. From 2021 onward, the margin turned positive, rising from 0.02% to 3.96% in 2024, indicating improved operational efficiency and profitability relative to revenue.

Summary

The overall financial performance demonstrates a significant turnaround from negative economic profits and margins in the early years to strong positive economic profit and margin in later years. This improvement correlates with consistent revenue growth, suggesting enhanced operational effectiveness and value generation. The marked increase in economic profit and margin from 2021 onward signifies that the company has been able to leverage revenue growth into substantial value creation over capital costs.