Dirty Laundry- Cintas (CTAS) vs. UniFirst (UNF)

A comparison of depreciation reveals key differences between the two peers

One of the key expense items for any industrial company is depreciation. Calculating the expense requires companies to make estimates about how long their property and equipment will remain in service and what salvage value they might recover at the end of their useful life. We encourage readers to review our January 7th article, The Over the Hill Gang, for a detailed discussion on evaluating depreciation policies.

Investors should analyze a company’s depreciation policies not only in the context of industry averages but also against actual operational experience. This helps uncover whether a company benefits from either using aggressive assumptions or utilizing fully depreciated equipment. A case in point is the comparison between Cintas (CTAS) and Unifirst (UNF). These two companies illustrate how different depreciation strategies can influence financial results, making them a valuable study.

It’s also worth mentioning given that Cintas and Unifirst have been in the spotlight recently, as CPRT made an acquisition offer for UNF, which the latter declined.

Let’s get behind the numbers…

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