Cintas' (CTAS) deal to acquire UniFirst (UNF) is estimated to be accretive to Cintas' earnings per share, versus the standalone company, by about 10% by year-four, considering the expected customer churn, cost synergies, and debt paydown, UBS said in a Wednesday note.
With Cintas expecting to more than double UniFirst's earnings before interest, taxes, depreciation and amortization by the end of the four-year integration, UBS said that this "numerically" provides Cintas pathway to 10% or more EBITDA compound annual growth rate over the next four years.
UBS further said that at a high-level, the acquisition will increase Cintas' revenue by about 20%.
UBS maintained its buy rating on Cintas with a $235 price target.
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