Critical Analysis: Cintas (NASDAQ:CTAS) & SGS (OTCMKTS:SGSOY)

SGS (OTCMKTS:SGSOY) and Cintas (NASDAQ:CTAS) are both large-cap business services companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, profitability, dividends, risk and earnings.

Dividends

SGS pays an annual dividend of $0.19 per share and has a dividend yield of 1.6%. Cintas pays an annual dividend of $1.80 per share and has a dividend yield of 0.9%. Cintas pays out 50.8% of its earnings in the form of a dividend. Cintas has raised its dividend for 42 consecutive years.

Insider & Institutional Ownership

63.5% of Cintas shares are owned by institutional investors. 14.9% of Cintas shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and target prices for SGS and Cintas, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SGS	1	3	2	2	2.62
Cintas	1	7	6	1	2.47

Cintas has a consensus price target of $212.77, suggesting a potential upside of 10.60%. Given Cintas’ higher probable upside, analysts plainly believe Cintas is more favorable than SGS.

Profitability

This table compares SGS and Cintas’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SGS	N/A	N/A	N/A
Cintas	17.57%	41.47%	19.36%

Valuation & Earnings

This table compares SGS and Cintas”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SGS	$8.38 billion	2.79	$806.28 million	N/A	N/A
Cintas	$10.34 billion	7.44	$1.81 billion	$3.54	54.34

Cintas has higher revenue and earnings than SGS.

Risk & Volatility

SGS has a beta of 0.81, meaning that its stock price is 19% less volatile than the S&P 500. Comparatively, Cintas has a beta of 0.94, meaning that its stock price is 6% less volatile than the S&P 500.

Summary

Cintas beats SGS on 12 of the 16 factors compared between the two stocks.

About SGS

SGS SA provides inspection, testing, and verification services in Europe, Africa, the Middle East, the Americas, and the Asia Pacific. It operates in five segments: Connectivity & Products, Health & Nutrition, Industries & Environment, Natural Resources, and Business Assurance. The company provides laboratory testing, product inspection and consulting, process assessment, technical and transactional assistance; and automotive, connectivity, softlines and accessories, and hardgoods, toys, and juvenile products, as well as government and trade facilitation services. In addition, it offers a range of testing, inspection and certification solutions for the crop science, food, health science, and cosmetics and hygiene industries; field services, technical assessment, and advisory services; and services related to industrial, public health and safety, environmental testing, and public mandates. Further, it provides assessment, auditing, and certification, supply chain assurance, training, consulting, and sustainability assurance services; agricultural commodities, geochemistry, laboratory testing petroleum and chemicals, metallurgy and consulting, mineral and metal commodities, and oil, gas, and chemical commodities; and sustainability solutions. The company serves the agriculture and food, chemical, construction, consumer and retail, energy, industrial manufacturing, life sciences, mining, oil and gas, public, and transportation sectors. SGS SA was founded in 1878 and is headquartered in Geneva, Switzerland.

About Cintas

Cintas Corporation engages in the provision of corporate identity uniforms and related business services primarily in the United States, Canada, and Latin America. 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, as well as sells uniforms. In addition, the company offers first aid and safety services, and fire protection products and services. It provides 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. The company was founded in 1968 and is based in Cincinnati, Ohio. Cintas Corporation was formerly a subsidiary of Cintas Corporation.