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Cintas Corporation (CTAS) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Cintas Corporation (CTAS)

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Intrinsic Value (DCF)

Current$193.03
→
Intrinsic$113.65
-41%
$74.21$113.65$192.11
Market implies 30% growth for 5 years
Current price reflects execution expectations above 17% growth — not unreasonable for quality businesses.
At $193, the market prices in continued strong cash flow growth (30%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $74 → Bull $192. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →13%15%17%19%
8%$143$156$170$184
10%$96$105$114$123
12%$71$77$84$91
14%$56$61$66$71

Bull Case

  • Bull case ($192) with 20% growth, 8% discount rate

Bear Case

  • Bear case ($74) implies 62% downside at 13% growth, 12% discount
  • Price reflects 30% growth expectations vs 17% historical — high bar to clear
  • Trading 41% above base case — execution must exceed assumptions to justify
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5-Year Free Cash Flow Projection

Year 1$2.05B
Year 2$2.39B
Year 3$2.79B
Year 4$3.26B
Year 5$3.81B
Terminal$60.35B

📐 Model Inputs

Growth Rate16.7%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$1.76BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is CTAS stock undervalued or overvalued?
🔴 OVERVALUED

CTAS trades at $193.03 vs. our DCF-derived intrinsic value of $113.65, implying -39% downside. Using a 9.5% WACC and 16.7% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($173.82) suggests limited upside.

What is CTAS's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.76B, projected at 16.7% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $2.39B net debt and dividing by 0.41B shares: Bear $73.13 | Base $113.65 | Bull $173.82. Current price $193.03 implies -39% to base case.

How is CTAS's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 16.7% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($49.02B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 27.9x.