11:21 AM EDT, 09/26/2024 (MT Newswires) -- Cintas ( CTAS ) posted strong fiscal Q1 results with an earnings per share beat driven by the company's "record-high" gross profit margin and operating margin, Morgan Stanley said in a note Thursday.

The company reported fiscal Q1 earnings of $1.10 per diluted share, up from $0.93 a year earlier. Analysts polled by Capital IQ expected $1. Revenue for the quarter ended Aug. 31 was $2.50 billion, compared with $2.34 billion a year earlier.

The firm's margin growth was propelled by robust operating leverage, improved supply chain processes, and gains from innovations such as SmartTruck, Morgan Stanley noted, adding that ongoing robustness in margins is anticipated in the future due to strong customer demand and enhanced efficiencies within their divisions.

The quarterly revenue missed Morgan Stanley's estimates -- led by the company's uniform segment -- but that "was more than offset by better than expected margin," the report said.

The investment firm noted that Cintas' ( CTAS ) "management tightened the guidance range for revenue, EPS, and organic growth by increasing the low end of the range."

"That said, we expect this could prove to be conservative, as CTAS tends to beat and raise through the year," according to the note.

Morgan Stanley increased the company's price target to $185 from $170, while keeping its equal-weight rating.

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