Critical Comparison: Virco Manufacturing (NASDAQ:VIRC) versus Cintas (NASDAQ:CTAS)

Cintas (NASDAQ:CTAS) and Virco Manufacturing (NASDAQ:VIRC) are both industrials companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, risk, earnings, profitability, analyst recommendations, dividends and valuation.

Volatility & Risk

Cintas has a beta of 0.92, suggesting that its share price is 8% less volatile than the S&P 500. Comparatively, Virco Manufacturing has a beta of 0.22, suggesting that its share price is 78% less volatile than the S&P 500.

Dividends

Cintas pays an annual dividend of $1.80 per share and has a dividend yield of 0.9%. Virco Manufacturing pays an annual dividend of $0.10 per share and has a dividend yield of 1.6%. Cintas pays out 48.1% of its earnings in the form of a dividend. Virco Manufacturing pays out -166.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Cintas has raised its dividend for 42 consecutive years and Virco Manufacturing has raised its dividend for 2 consecutive years. Virco Manufacturing is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Cintas and Virco Manufacturing”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cintas	$11.26 billion	7.15	$2.00 billion	$3.74	53.85
Virco Manufacturing	$199.65 million	0.48	$2.57 million	($0.06)	-101.17

Cintas has higher revenue and earnings than Virco Manufacturing. Virco Manufacturing is trading at a lower price-to-earnings ratio than Cintas, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Cintas and Virco Manufacturing’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cintas	17.75%	42.05%	19.76%
Virco Manufacturing	-0.48%	-0.16%	-0.10%

Insider & Institutional Ownership

63.5% of Cintas shares are held by institutional investors. Comparatively, 31.0% of Virco Manufacturing shares are held by institutional investors. 14.9% of Cintas shares are held by insiders. Comparatively, 16.9% of Virco Manufacturing shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings for Cintas and Virco Manufacturing, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cintas	1	6	7	1	2.53
Virco Manufacturing	1	2	0	0	1.67

Cintas presently has a consensus target price of $212.31, suggesting a potential upside of 5.42%. Given Cintas’ stronger consensus rating and higher probable upside, analysts plainly believe Cintas is more favorable than Virco Manufacturing.

Summary

Cintas beats Virco Manufacturing on 15 of the 18 factors compared between the two stocks.

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.

About Virco Manufacturing

Virco Mfg. Corporation engages in the design, production, and distribution of furniture in the United States and Canada. The company offers seating products, including 4-leg chairs, cantilever chairs, mobile task chairs and lab stools, tablet armchairs, steel-frame and floor rockers, series stools, hard plastic seating, folding and upholstered stack chairs, and plastic stack and upholstered ergonomic chairs. It also provides activity, butcher block, folding, office, technology, and mobile tables; desks and workstations, and instructor media stations and towers; chair desks and combo units, tablet arm and caster units, mobile workstations, student desks, and returns and credenzas; and computer furniture solutions. In addition, the company provides administrative office furniture, including desks, returns, bookcases, and other items, as well as steel storage cabinets, wardrobe tower cabinets, file credenzas, and mobile pedestals; laboratory furniture comprising steel-based science tables, table bases, lab stools, and wood-frame science tables; mobile furniture, such as mobile tables, mobile cabinets, and mobile chairs for school settings and offices; and handling and storage equipment, and stackable storage trucks. It serves public and private educational institutions, charter schools, convention centers and arenas, hospitality providers, government facilities, and places of worship through its sales and support teams, and dealers' network. Virco Mfg. Corporation was incorporated in 1950 and is headquartered in Torrance, California.