Cintas Corporation Beats Q1 EPS Estimates; Gives FY2015 Guidance (CTAS)

After the closing bell on Monday, business services company Cintas Corporation (CTAS ) released its fiscal 2015 first quarter results, with revenues coming in basically flat compared to last year’s Q1, while adjusted EPS came in higher.

CTAS’s Earnings in Brief

  • Cintas reported second quarter revenues of $ 1.102 billion, up 0.2% over last year’s Q1 revenues of $ 1.100 billion.
  • Adjusted earnings for the quarter came in at $ 92.4 million, or 78 cents per share, a significant gain over last year’s Q1 figures of $ 76.5 million, or 62 cents per share.
  • The company’s results met analysts’ revenue expectations of $ 1.1 billion and EPS beat the 75 cent estimate.
  • Looking ahead, Cintas sees FY2015 earnings in the range of $ 3.20-$ 3.29 on revenue in the range of $ 4.4 billion to $ 4.75 billion. Analysts are expecting EPS of $ 3.09 on revenue of $ 4.50 billion.

CEO Commentary

Cintas CEO Scott D. Farmer released the following comments: “Our first quarter results reflect the continued good execution by our employees, who we call partners. We have focused on selling good, profitable business over the past few years, as well as managing our cost structure and continuously improving the efficiency of our processes. This focus has resulted in improved margins and better customer retention.”

CTAS’s Dividend

Cintas made no mention of its annual dividend, which was to be expected as the company normally declares a dividend raise in mid-to-late October. CTAS paid its most recent annual dividend of 77 cents on December 11, 2013. We expect the company to announce a higher dividend within the coming weeks.

Stock Performance

CTAS stock was up 55 cents, or 0.83%, in after hours trading. YTD, the stock is up 12.21%.

CTAS Dividend Snapshot

As of Market Close on September 29, 2014

BK dividend yield annual payout payout ratio dividend growth

Click here to see the complete history of CTAS dividends.

The Bottom Line

Cintas Corporation (CTAS) is not recommended at this time, holding a DARS™ Rating of 3.3 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

The Dividend Daily

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AmTrust Still Offers Upside, With An Attractive Entry Point

By BMD Asset Management and Research:

AmTrust Financial Services, Inc (NASDAQ:AFSI) reported strong second quarter earnings on August 7, 2014, causing analysts to revise their estimates considerably higher for both this year and next year. While the stock price has declined over 8% since the report, the valuation looks very reasonable. Given the strong earnings estimate revisions and growth estimates, AmTrust offers investors strong upside potential.

About The Company

AmTrust is a multinational property and casualty insurer specializing in coverage for small businesses. They offer workers’ compensation insurance, extended warranty coverage, specialty middle market property and casualty insurance and a host of related products and services. They have built a reputation as an innovative, technology driven insurance company. Their commitment to excellence is the common thread connecting each of our businesses.

Quarterly Results

AmTrust announced better than expected results for the second quarter. The company generated $ 107.1 million of Non GAAP net income for the second

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Peak Gold: Nightmare or Reality?

Peak Gold: Nightmare or Reality?

By Tim Maverick, Staff Writer

Despite the price of gold erasing its 2014 gains, one gold expert is predicting an event that will permanently change the market for this commodity… peak gold.

The CEO of Goldcorp (GG), Chuck Jeannes, recently told The Wall Street Journal that either this year or next gold production will reach a height that will never be seen again.

That’s quite a statement!

But is Jeannes just trying to prop up gold prices, or are there hard facts backing up his claim?

Let’s examine the situation.

Looking at the Data

Gold production has steadily been on the rise since the late 1970s. Last year, according to figures from the U.S. Geological Survey, gold production came in at 2,270 metric tons.

But it looks like that trend is about to change dramatically.

A recent study by SNL Metals and Mining Research said that over the past 24 years, gold production came in at 1.84 billion ounces.

However, only 1.66 billion ounces of the precious metal was found during that period, which included 217 major discoveries of more than two million ounces.

More ominously, the trend line of major discoveries is pointing downward – as you can see in this chart from the report.

Have We Reached Peak Gold?: Gold Discoveries, Production, and Pricing from 1990 to 2013

The report goes on to say that during the 1990s, there were 1.1 billion ounces of gold found in 124 large deposits.

But since the turn of the century, only 605 million ounces were discovered in just 93 large deposits. And many of these discoveries involve lower-grade ores.

Another Factor at Play

The report highlights another worrisome trend… the time needed to bring a discovery into production.

This time frame used to average only eight years between 1985 and 1995.

But starting in 1996, the length of time necessary to bring a discovery into production lengthened. SNL states that, for the 57 new major mines put into production between 1996 and 2005, the time averaged 11 years.

And things have gotten even worse recently. For the 111 new mines put into production between 2006 and 2013, the time lengthens out to 18 years before mines yield a noticeable output.

Plus the trend is still going higher!

SNL forecasts that, for the 63 projects currently in the pipeline between now and 2019, the time to bring them to fruition will be 19.5 years.

The longer time frames are due not only to lower-quality discoveries, but also more governmental and environmental restrictions placed on mining projects.

These restraining factors can be seen in current gold discoveries – only a third have either started producing or booked as reserves.

The Outlook

Gold prices are still about 50% higher than before the Federal Reserve embarked on its quantitative easing stimulus program.

But the bottom line here is that the Goldcorp CEO does have some hard facts backing up his “peak gold” claim. And unlike with “peak oil,” there seems to be no gusher (U.S. shale) of new supply coming online anytime soon.

And “the chase” continues,

Tim Maverick

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Wall Street Daily

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Dividend Stocks: It’s Riskier NOT to Buy

In the world of dividend stocks, mistakes of omission can be more costly than mistakes of commission when you’re likely to make some income.

The post Dividend Stocks: It’s Riskier NOT to Buy appeared first on InvestorPlace.

InvestorPlace » Dividend Growth Investor

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Charlie Driefus: How In-Depth Accounting Analysis Helps Identify Good Investments

By Canadian Value. Read more » »
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California Dumps Hedge Funds: Lessons Learned!

By David G. Dietze, JD, CFA, CFP. Read more » »
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Weekend Edition – Today’s the Day

In this letter we’ve written a number of times about the very unique monetary environment we’ve found ourselves in since the financial crisis of 2008-2009. To recap, we know a couple things: 1) this is the longest the Federal Reserve has kept rates at these levels, well, since forever; and 2) we don’t know, nor does anyone else know, exactly how this plays out. Finally, we always default to our standard practices, which are mitigating our chances of losing money, as opposed to being blindly optimistic.

Today, I’m not here to dive into the “great debate” about how, when and what happens when the Fed starts to march rates up, but I do want to talk about a specific unintended consequence of rates being where they’ve been for so long, given the amount of capital sloshing around the economy. I also want to point out a key takeaway related to this unintended consequence of an abundance of capital and heightened valuations.

Let’s dive in.

Going Private

At, we talk, nearly exclusively, about the public markets. We take an “inch wide, mile deep” approach into the world of publicly traded, dividend paying securities. However, we also understand that our members follow an asset allocation strategy that almost certainly is not entirely comprised of publicly traded, dividend paying securities. Many portfolios likely include some element of privately held businesses.

Given the amount of capital in the economy–which is a difficult-to-decipher combination of sustained low lending rates, increased asset prices and fundamentally strong growth–the opportunity to invest in private business has likely come across your desk.

While opportunities in private business may be on the rise, partially due to low rates, a key takeaway, having analyzed both public and private companies as an investor and potential investor, is this: private company financials are not the same as publicly traded company financials.

No kidding, right?

Well, yes and no. While there have certainly been outright fraudsters at the helm of pubco financials in the past (Enron anyone?), the probability of additional layers of depth to private companies’ financials is high.

As we do with publicly traded entities, we always encourage thorough diligence. There are no shortcuts to thorough diligence. When and if you’re looking at private businesses as an investment opportunity, we underscore this even more; nothing can be taken for granted.

Public Vs. Private

There are a number of checks and balances and variables that can affect a private company’s financials when contrasted to a publicly traded company.

A few specifics to consider:

  • Always normalize owners’ salaries - Often times, private company owners take a salary above where the “market” would suggest they should for tax or other purposes. This can impair non-adjusted earnings, which a private investor needs to understand to aid the valuation picture.
  • Balance sheet depth – Are there items on the balance sheet that might be impaired or reflect less than true value, based on a lack of enforcements of re-calculating as required by publicly traded companies? Perhaps there’s an asset that needs to be written off, but hasn’t, due to a lack of oversight or necessity in a private business. This needs to be understood by the private investor to get a true picture of balance sheet strength.
  • Non-arm’s length relationships – Private business is often joined at the hip with “family business.” By definition, a family business includes family members working together – understanding those relationships and deals between family members is important for a potential private investor. By no means am I insinuating inherent shadiness in this type of arrangement, it simply needs to be understood, especially if not well documented or non adherent to what the market would dictate for a similar relationship given an arm’s length relationship.

The Bottom Line

Investing in private businesses needs to be done with a heightened level of scrutiny, even heightened from the detailed level we emphasize for publicly traded companies.

Given the easy money policy the Fed has implemented for the last number of years, the opportunities to invest privately have likely increased for individuals, so be extra cognizant and diligent when investigating and potentially allocating your hard earned capital.

Have a great weekend.

The Dividend Daily

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The Ebola Trade

By Cup & Handle:

The US Centers for Disease Control and Prevention (CDC) estimates that up to 1.4 million people could be infected by the Ebola virus by mid-January in Liberia and Sierra Leone. The World Health Organization (WHO) said in a recent note, “Without drastic improvement in control measures, the number of cases and deaths are expected to continue increasing from hundreds to thousands per week in the coming months.” The virus has already spread into Nigeria – Africa’s most populous country.

Source: World Health Organization

In Liberia, reported cases are doubling every 15-20 days. To put that into context, if you invested $ 1,000 in an instrument that doubled every 15 days, you’d be a millionaire in 3 months. The WHO’s Director-General has called the Ebola outbreak the “greatest peacetime challenge that the United Nations and its agencies have ever faced.”

In early May I wrote that Ebola and other antibiotic-resistant viruses were

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Will the Gold Plunge Continue?

Will the Gold Plunge Continue?

By Karim Rahemtulla, Chief Resource Analyst

Turmoil in the Middle East, rebellion in Ukraine, an Ebola outbreak in West Africa, and massive quantitative easing…

In the past, even a whiff of conflict or financial crisis would have sent gold prices skyrocketing.

Yet today, despite high consumer demand, the entire complex of precious metals is acting as if there were vast supplies.

Gold prices are once again headed for $ 1,150 – the support level I warned that gold would return to.

And investor sentiment could continue to get more negative from here.

However, I just had a private meeting in Toronto with two of the most plugged-in men in the business, and their outlook could not be more bullish.

The Metal Kings Say…

Earlier this week, I met with Eric Sprott and Rick Rule, arguably two of the most successful investors in the precious metals space. The question in their minds is not if gold will go higher, but when.

I agree with their conclusion, but I don’t see it happening in the near future.

Even these metal heavyweights’ optimism can’t hide the fact that gold has been in a bear market for two years.

Gold is down more than a third from its highs, putting many producers in danger of operating below cost.

Even so, I wrote earlier this year about my retail and wholesale contacts who were looking for lower gold prices, despite gold values rallying up to the high $ 1,300s.

Clearly, the demand is there. Especially from the Chinese and the Indians. But supply is also there as short-term holders are tiring of stockpiling something that’s underperforming.

This underperformance won’t last forever, though.

Trust in Gold

Buying and owning gold for what might happen next week or next year isn’t what the metal is all about.

Gold is what you buy when the U.S. dollar and other currencies are doomed to lose value due to inflation, increasing debt, and currency printing.

Gold is also what you buy when there’s less supply than demand. And when you look forward, the supply situation doesn’t look very good.

Unlike the shale revolution, which added billions of barrels of supply to the oil market, there’s no “shale gold” play.

In fact, it’s getting harder to find viable new mines. The cost of starting a mine is in the hundreds of millions, leaving any prolific development strictly to a handful of companies that can foot such a bill.

Unfortunately, these companies aren’t looking to develop any major projects after divesting several high-cost ventures over the past few years.

This isn’t an overnight bet, but it’ll likely pay off big, as owning bullion, gold ETFs, or high-quality gold stocks is a solid play.

Gold traded at $ 300 for years until one day it started to move higher. The price multiplied six times over within the decade, resulting in the best performance of any asset class this century. And it could easily happen again.

In the next issue, I’ll talk more about my visit to Toronto and what I learned about a new type of gold ETF.

And “the chase” continues,

Karim Rahemtulla

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September Was Elon Musk’s Best Month Ever

September Was Elon Musk’s Best Month Ever

By Robert Williams, Founder

Earlier this summer, I recommended buying Tesla (TSLA).

At the time, shares were trading for a bargain price of $ 227.

“Tesla is 10 times more likely to hit $ 300 than it is to fall beneath $ 193, the level at which shares peaked in October 2013.” – Robert Williams, June 18, 2014

Well, the stock recently traded as high as $ 289, and…

CEO Elon Musk just enjoyed the best month ever.

But let’s not give Musk a champagne toast quite yet.

According to some insiders, his escapades over the last 30 days are a warning to sell shares.

Before we address whether my “Buy” rating on Tesla still holds true, allow me to share the six reasons why I believe Elon Musk just enjoyed the best month in modern technology history.

Reason #1: Nevada’s Ridiculous ROI. On September 3, Musk picked Nevada as the state in which to build Tesla’s mammoth $ 5-billion lithium-ion battery gigafactory. Located in Reno, it will be the biggest battery factory in the world and create 6,000 new jobs. But it took a tax break package worth $ 1.3 billion to seal the deal and fight off competition from California, Texas, Arizona, and New Mexico. Musk says Tesla will generate its own energy from solar, wind, and geothermal sources to power the factory. It’s expected to produce $ 100 billion for Nevada over 20 years.

Reason #2: Blasting Into Orbit. On September 7, Musk’s SpaceX company blasted the Falcon 9 rocket into space, where it made contact with the AsiaSat 6 satellite. It was the 12th successful Falcon 9 flight and the second successful mission for AsiaSat 6 this summer.

Reason #3: One Small Step for Man… On September 16, SpaceX won $ 2.6 billion of a $ 6.8-billion NASA contract to take astronauts to the International Space Station (ISS). It was a major coup, given that Boeing (BA) was expected to claim the entire contract. It also marks the United States’ return to manned spaceflight, and sets the stage for commercial flights to space. The first manned expedition to the ISS is planned for 2017.

Reason #4: Forget Airports… On September 22, SpaceX broke ground on its new coastal spaceport in Brownsville, Texas. From there, the company will initially launch commercial satellites into space, with private and commercial astronauts following at a later date. The Texas government will contribute $ 15 million towards construction, with SpaceX spending a further $ 100 million. The first launch is tentatively planned for late 2016.

Reason #5: Access to Alien Technology. On September 23, SpaceX’s Dragon capsule docked at the ISS, delivering 5,000 pounds’ worth of supplies and equipment. That included a 3-D printer and 20 mice for biological research into the loss of bone density and muscle mass in space. It was SpaceX’s fourth mission to the ISS – part of a $ 1.6-billion contract of 12 flights. SpaceX has also created Dragon 2. Musk calls it “a significant upgrade in technology.” That’s because it’s “capable of a precise, propulsive landing. So it will be able to land anywhere in the world on its thrusters with the accuracy of a helicopter… If you imagine an alien spaceship landing, that’s how it would land.”

Reason #6: The Biggest Solar Factory in the West. On September 23, it was announced that SolarCity (SCTY) – where Musk serves as Chairman – would build the Western Hemisphere’s largest solar factory in Buffalo. The one-million-square-foot building will manufacture solar panels and create 5,000 jobs. SolarCity will spend $ 5 billion on the project over the next decade, and when the factory is running at full speed in 2016, it will crank out one gigawatt of solar power per year.

I’d say that’s a pretty incredible month, right?

But does it also speak to a CEO who’s growing beyond his means?

Well, in regards to Tesla’s stock, the bears will point out that Tesla’s total year-to-date output remains less than one day’s worth of output at GM (GM) or Ford (F).

According to a JP Morgan (JPM) analyst, Tesla might be able to deliver only 18,250 vehicles in Q4, which implies that the company can effectively produce 73,000 vehicles over the course of a year.

Tesla’s target for 2015 is to manufacture 100,000 cars. Yikes.

As I see it, the even bigger negative is Tesla’s disappointing buying among hedge funds in the latest quarter.

Companies enjoying incredibly bullish sentiment typically attract upwards of a billion dollars in newly opened positions. But from April through July, hedge funds and institutions only bought $ 548-million worth of Tesla’s stock.

Remember, the stock market functions just like an auction… when buyers are more active than sellers, the bid price increases.

On those merits, without strong levels of institutional buying, Tesla’s shares are under no pressure to appreciate.

So for now, let’s move the stock to a “Hold.”

Onward and Upward,

Robert Williams

Founder, Wall Street Daily

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