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The January BLS jobs report continued last month's momentum and is a positive for
uniform rental stocks. Add/Stop employment (traditional uniform wearing-industries)
gains remain strong (growth rates at a 5-year high) and consistent with prior mid-cycle
recovery levels (e.g., mid-late 1990s/2004-2006). While we recognize that the stocks are
increasingly discounting stronger employment momentum (and call volume has picked up
recently), we continue to view expectations as reasonably set, with estimates likely biased
higher, at least near term.
■ Payrolls positively surprise. January payrolls positively surprised, increasing by
243,000 (+257,000 private sector only), above the +155,000 consensus and lending
credibility to last month's strong data which some critics had attributed to seasonal
distortions. The YOY change in employment increased +1.5% (highest rate this cycle)
with the unemployment rate ticking down to 8.3% (from 8.5%). While job growth was
widespread, we note particular strength in professional and business services
(+70,000), leisure and hospitality (+44,000), and (encouragingly) manufacturing
(+50,000).
■ Uniform-related employment quite strong. Baird's Add/Stop Employment Index
specific to uniform rental-related employment maintained momentum, increasing by
86,000. The monthly gain is the second highest this cycle and consistent with prior
mid-cycle recovery levels (e.g., mid-late 1990s / 2004-2006). Stable organic growth is
realized when the Baird index is in the 50-70k jobs range. In 2011, the average monthly
gain was 56,000, consistent with the middle of this range. Over the past three months
however, Add/Stop employment has averaged +84,000.
■ Continue to recommend owning uniform stocks. Recent employment data remains
supportive with Add/Stops slowly becoming a greater contributor to overall growth rates.
We continue to view the uniform stocks positively, with conservatively set guidance
providing a pathway to upwardly biased earnings revisions. That said, valuation has
become more balanced with near-term alpha generation likely to be more modest than
2011's gains.
■ G&K (Outperform): We continue to see opportunity through progress on
management's turnaround strategy. We suggest investors focus on EBITDA margin
expansion and long-term earnings power, supported by GKSR's cash flow and balance
sheet.
■ Cintas (Outperform): Recent performance has been strong, though more difficult
comps are approaching. We still see opportunities across CTAS's business (particularly
beyond garment rental) and cite likely upside to conservatively set guidance; recent
stock performance suggests expectations are migrating higher, increasing risk,
however.
■ UniFirst (Outperform): UniFirst continues to execute above peers, suggesting share
gains. Although rising merchandise costs have pressured earnings, we believe
opportunities for balance sheet deployment provide a potential catalyst.
INDUSTRY UPDATE
Prices as of 2/2/12
Ticker PriceMkt Cap
(mil)Rating Risk
CTAS $37.33 $4,842 O A
GKSR $33.45 $626 O A
UNF $61.41 $1,201 O A
Baird covered companies
February 3, 2012 Baird Equity ResearchBusiness Services
Facility ServicesUniformed Employee Growth Rates at 6-Year High
Andrew J. Wittmann, CFA
414.298.1898
Justin P. Hauke
314.445.6519
[Please refer to Appendix- Important Disclosuresand Analyst Certification]
2
Details
Uniform Estimates Likely Biased Higher Following Strong EmploymentMomentum
The January BLS jobs report continued last month's momentum and is a positive for uniform rental
stocks. Add/Stop employment (traditional uniform wearing-industries) gains remain strong (indeed, YOY
growth rates are now at a 6-year high), with total employment growth consistent with prior mid-cycle
recovery levels (e.g., mid-late 1990s/2004-2006). While we recognize that the stocks are increasingly
discounting stronger employment momentum, we continue to view expectations as reasonably set, with
estimates likely biased higher near term.
Our primary basis for recommendation at this point is upwardly biased estimates, continuing
recent trend (see below), as consensus expectations appear to underappreciate top-line
momentum.
We continue to recommend ownership of all three uniform companies despite strong recent stock
outperformance. Management guidance and Street consensus appears conservative across our list, in
our view, with estimates likely biased higher at least over the near-term. Indeed, this has been the
pattern of uniform stock performance throughout the recovery as estimates have been slow to adjust to
an improving labor market (we note, however, that the reverse phenomenon was also apparent on the
way down). The charts below demonstrate quarterly EPS outperformance versus consensus at CTAS,
GKSR, and UNF over the past 10 quarters.
Cintas Corp. Quarterly EPS vs. Consensus
Source: Company reports
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
F1Q10 F2Q10 F3Q10 F4Q10 F1Q11 F2Q11 F3Q11 F4Q11 F1Q12 F2Q12
Consensus
Actual
February 3, 2012 | Facility Services
Robert W. Baird & Co.
3
G&K Services Quarterly EPS vs. Consensus
Source: Company reports
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
F1Q10 F2Q10 F3Q10 F4Q10 F1Q11 F2Q11 F3Q11 F4Q11 F1Q12 F2Q12
Consensus
Actual
UniFirst Quarterly EPS vs. Consensus
Source: Company reports
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
F1Q09 F2Q09 F3Q09 F4Q09 F1Q10 F2Q10 F3Q10 F4Q10 F1Q11 F2Q11 F3Q11 F4Q11 F1Q12
Consensus
Actual
The uniform stocks were strong alpha generators in 2011 with this trend accelerating in recent months
(particularly given recent improvement in macro employment data and impressive operating results in
3Q-4Q). We believe stock performance has been driven largely by cyclical momentum (both revenue
and margins) and previously low expectations. Recently the “buy USA” trade has brought new interest to
uniform rental companies.
February 3, 2012 | Facility Services
Robert W. Baird & Co.
4
Uniform Stock Performance
Source: FactSet Research Systems
One-Month Percentage Price Change YTD Percentage Price Change
Three-Month Percentage Price Change Trailing 12 Months Percentage Price Change
0% 2% 4% 6% 8% 10% 12% 14% 16%
S&P 500
Cintas
U niFirst
U niform Index
G&K Services
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0%
S&P 500
G &K Services
U niFirst
Uniform Index
Cintas
0% 2% 4% 6% 8% 10% 12% 14% 16%
S&P 500
Cintas
UniFirst
Uniform Index
G&K Services
0% 5% 10% 15% 20% 25% 30%
S&P 500
G &K Services
UniFirst
Uniform Index
C intas
The last several month's labor reports suggest greater confidence in recent momentum and should
provide a nice cyclical tailwind for all. That said, and while we previously highlighted valuation as forming
a component of our rating (particularly at GKSR, which had previously failed to meaningfully participate
in the recent rally), we now see upwardly revised estimates as the greatest catalyst for the group (versus
multiple expansion).
Indeed, the group is now trading at an average forward 12 month EV/EBITDA multiple of 7.5x and 15.7x
earnings. While we believe current multiples may reflect a more balanced view of valuation (near 5-year
historical average levels, see chart below), we see opportunity for upwardly revised estimates to allow
the group to grow into its current multiples, potentially offering additional alpha opportunities.
Uniform Industry Valuation
Price Price Target Rating
Company Ticker FTM AVG FTM AVG
Cintas CTAS $37.99 $38 O 8.2x 7.7x 16.4x 16.2x
G&K Services GKSR $34.41 $38 O 7.7x 7.3x 15.4x 15.9x
UniFirst UNF $62.16 $68 N 6.6x 5.7x 15.2x 13.0x
Average: 7.5x 6.9x 15.7x 15.0x
As of 02/03/2012
Source: FactSet Research Systems and Baird estimates
EV/EBITDA, ftm P/E
February 3, 2012 | Facility Services
Robert W. Baird & Co.
5
The January BLS Employment Report
January payrolls positively surprised, increasing by 243,000 (+257,000 private sector only), above the
+155,000 consensus and lending credibility to last month's strong data which some critics had attributed
to seasonal distortions. The YOY change in employment increased 1.5%, the highest this cycle, with the
unemployment rate ticking down to 8.3% (from 8.5%). While job growth was widespread, we note
particular strength in professional and business services (+70,000), leisure and hospitality (+44,000),
and (encouragingly) manufacturing (+50,000).
We note that this month's release also contained annual revisions to the BLS's establishment survey
data, resulting in modest revisions to seasonally adjusted data from January 2007 forward. The
benchmark revisions added a cumulative 165,000 jobs to the March 2011 reference benchmark
including 77,000 jobs related to adjustments to the BLS' firm birth/death model, used to estimate
employment at new and exiting small firms not captured by the survey. We also note that the BLS made
some minor adjustments to its industry classification system (now using NAICS 2012 classification
versus the previous NAICS 2007 classification) which also created minor adjustments to our Add/Stop
Index.
Net, we see these revisions as consistent with annual industry practice with the cumulative
effect minor but upwardly biased. Indeed, in thoroughly dissecting the data, we see the report as
broadly positive, with few (if any) distortions that suggest a degree of skepticism to the strength.
BLS Nonfarm Payrolls
Source: Bureau of Labor Statistics and Baird Research
(1000)
(800)
(600)
(400)
(200)
0
200
400
600
800
1000
-6%
-4%
-2%
0%
2%
4%
6%
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
BLS Nonfarm Payrolls 1-month change (000s), right
BLS Nonfarm Payrolls YOY Growth Rate, left
Forward-looking employment indicators were little changed. Total average weekly hours held constant at
34.5 hours as did wages (+$0.04 to $23.29). However, the rate of improvement in the private
employment diffusion index improved from a healthy 62.4 to 64.1, continuing recent momentum in
forward outlooks. We view the strong improvement in the employment diffusion index as an important
data point suggesting potential sustainability of recent hiring momentum.
While the U.S. employment recovery has been slow, the pace of gains has gradually improved (in fact,
the sequential rate of employment growth over the past two months has been similar to levels in the late
1990s and relatively strong when compared across all cycles). That said, the overall trajectory of
employment growth is still well below prior post-recession recovery gains. Indeed, the figure below
shows the growth in employment (indexed at the solid black line to cycle peak employment), which
demonstrates the pronounced sluggishness of the current "recovery" but also the fact that growth rates
have, at least, become more similar to the mid-2000s cycle (off of a lower base).
February 3, 2012 | Facility Services
Robert W. Baird & Co.
6
Nonfarm Payroll Growth (indexed at month of cyclical employment peak)
Source: Bureau of Labor Statistics and Baird Research
90
95
100
105
110
115
-26
-24
-22
-20
-18
-16
-14
-12
-10 -8 -6 -4 -2 0 2 4 6 8
10
12
14
16
18
20
22
24
26
28
30
32
34
36
38
40
42
44
46
48
Sep-48 Jul-53
Aug-57 Apr-60
Mar-70 Jul-74
Mar-80 Jul-81
Jun-90 Feb-01
Jan-08
Current Cycle
2000-2001 Cycle
February 3, 2012 | Facility Services
Robert W. Baird & Co.
7
Baird Add/Stop Employment Index Gains Remain Solidly Mid-Cycle
Baird's Add/Stop Employment Index specific to uniform rental-related employment maintained
momentum, increasing by 86,000, with revisions adding an additional 20,000 jobs in
November/December. The monthly gain is the second highest this cycle and consistent with prior
mid-cycle recovery levels (e.g., mid-late 1990s / 2004-2006). Stable organic growth is realized when the
Baird index is in the 50-70k jobs range. In 2011, the average monthly gain in Add/Stop employment was
+56,000, consistent with the middle of this range. Over the past three months, Add/Stop employment
has averaged +84,000.
Baird Add/Stop Employment Index
Source: Bureau of Labor Statistics and Baird Research
(400)
(300)
(200)
(100)
0
100
200
-8%
-6%
-4%
-2%
0%
2%
4%
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Baird Add/Stop Employment Index (000s), right
Baird Add/Stop Employment Index YOY Growth Rate, left
Average = 65k Average = 54k
Cycle Average = 48k
2011 Average = 56k
3-Month Average = 84k
We continue to highlight the recent momentum in Add/Stop momentum over the past several months as
a critical dynamic to the data. Following a slowdown in employment in mid-2011, hiring appears to have
strongly recovered as we headed into the end of the year and now suggests evidence of stability. We
note that this factor also parallels the increasing role of Add/Stops as a contributor to overall organic
growth in 4Q11 at the uniform rental companies (a positive, as employee additions at existing accounts
typically carry higher incremental margins). Indeed, GKSR echoed this commentary on their F1Q12
earnings call earlier this week -- though, importantly, we note Add/Stops are yet to be the primary driver
of overall growth (new account gains, service additions and positive pricing are also playing a role).
February 3, 2012 | Facility Services
Robert W. Baird & Co.
8
Baird Add/Stop Employment Index (000s), recent performance
Source: Bureau of Labor Statistics and Baird Research
0
20
40
60
80
100
120
140
Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12
More Bullish
Less Bullish
More Bullish?
We also note that the YOY growth rate in Add/Stop Index employment categories continues to outpace
the broader economy for the first time since late 2006/early 2007 (a phenomenon which has been
apparent throughout 2011, supporting alpha generation in the uniform rental stocks, in our opinion). As
we have highlighted, this has been a critical element of the data as uniform employment lagged broader
employment categories throughout the recovery until February 2011.
Total Non-Farm Employment vs. Baird Add/Stop Employment Index (YOY Change)
Source: Bureau of Labor Statistics and Baird Research
-8.00%
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
Ja
n-0
7
Ma
r-0
7
Ma
y-0
7
Ju
l-0
7
Se
p-0
7
No
v-0
7
Ja
n-0
8
Ma
r-0
8
Ma
y-0
8
Ju
l-0
8
Se
p-0
8
No
v-0
8
Ja
n-0
9
Ma
r-0
9
Ma
y-0
9
Ju
l-0
9
Se
p-0
9
No
v-0
9
Ja
n-1
0
Ma
r-1
0
Ma
y-1
0
Ju
l-1
0
Se
p-1
0
No
v-1
0
Ja
n-1
1
Ma
r-1
1
Ma
y-1
1
Ju
l-1
1
Se
p-1
1
No
v-1
1
Ja
n-1
2
BLS Total Non-Farm Employment
Baird Add/Stop Employment Index
Growth in Baird Add/Stop
Index employment
continues to outpace
total NFP employment
Most uniform verticals continue to posted positive growth. We also highlight that most uniform
verticals comprising our Add/Stop Index continues to post positive growth in January, suggesting gains
remain broad-based. Food Services led the way, but individual manufacturing components were also
important contributors. Previously (several months ago), trends had been more mixed. The figure below
shows the absolute job gains/losses within several of the primary uniform-wearing industries comprising
our Index over the last month.
February 3, 2012 | Facility Services
Robert W. Baird & Co.
9
Baird Add/Stop Employment Index Component Industries: 1-Month Employment Change (000s)
Source: Bureau of Labor Statistics and Baird Research
(5)
(1)
-
1
2
4
5
5
7
11
11
14
33
Repair and Maintenance
Truck Transportation
Specialty Trade Contractors
Wholesale Trade - Durable Goods
Gasoline Stations
Wholesale Trade - Nondurable Goods
Fabricated Metal Products
Chemicals
Food and Beverage Stores
Motor Vehicle and Parts Dealers
Food Manufacturing
Machinery
Food Services and Drinking Places
1-month Employment Change (000s)
Add/Stop Employment historically a good predictor of uniform organic growth. Importantly we
also note that the YOY change in our Add/Stop Index has historically been well-correlated with uniform
rental organic growth rates, particularly at CTAS. The figure below demonstrates this relationship.
Continued momentum in employment could suggest positive bias to management guidance at all three
uniform companies.
CTAS Organic (Rental) Revenue Growth YOY vs. Baird Add/Stop Employment Index
Note: CTAS organic growth reflects interpolated calendar growth figures; 3Q11-4Q11 reflect Baird estimates
Source: Bureau of Labor Statistics, Company Reports and Baird Research
R² = 0.7286
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
-8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0%
Add/Stop Index
CTAS Organic
Rental Revenue
More Positive Surprises in December Derivative Employment Data
Derivative employment data was somewhat more mixed this month, though overall consistent with an
improving labor market.
Challenger Layoff Report. Negatively, the Challenger Layoff Report suggested a strong surge in
planned layoffs in January, with 53,486 planned layoffs (mostly in retail and financial services)
increasing 38.9% YOY, according to Challenger, Gray & Christmas, Inc. That said, we note that very
strong Christmas retail hiring in 2011 may have contributed to the higher layoff number (temporary jobs).
Sequentially, planned layoffs increased 28% (the highest level in four months), though the report noted
February 3, 2012 | Facility Services
Robert W. Baird & Co.
10
that a January surge is typically expected.
ADP Employment Report. Positively, the January ADP report (published 2/1) suggested continued
momentum though a sequential moderation from a very strong December report, though likely
(admittedly) included seasonal distortion, indicating net job growth of 170,000, generally consistent with
the 180,000 consensus. Gains were predominantly driven by small (+95,000) and medium (+72,000)
businesses as well as the service economy (+152,000) versus goods-producing (+18,000) industries.
Large firm (+500 employees or more) employment continues to hold relatively flat, which may suggest
hiring has come primarily through attrition. Manufacturing employment grew by 10,000, its third
consecutive month of positive gains.
Recall, that the ADP report tracks private payroll only and is based on actual payroll receipts received by
ADP, as opposed to the survey/model-driven BLS report, which may suggest that ADP provides a better
gauge of actual employment conditions.
Total Nonfarm Private Payrols, by Firm Size (000s)
Source: ADP Employment Report
105,000
107,000
109,000
111,000
113,000
115,000
117,000
(1,000)
(800)
(600)
(400)
(200)
-
200
400
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Large Firms (499+), MoM Change
Medium Firms (50-499), MoM Change
Small Firms (1-49), MoM Change
Total Employment, (right)
Initial Jobless Claims. Initial jobless claims held relatively constant in January and remain below the
critical 400,000 level consistent with a declining unemployment rate). The weekly was report was, in
general, consistent with expectations throughout the month with the 4-week moving average now at
375,750 versus 374,000 on 12/31/11 (see figure below).
February 3, 2012 | Facility Services
Robert W. Baird & Co.
11
Initial Jobless Claims
Note: The red line reflects claim levels historically associated with net employment growth. Gray bars denote NBER recessions
Source: U.S. Department of Labor, Bureau of Labor Statistics; National Bureau of Economic Research
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
550,000
600,000
650,000
700,000
Jan-67 Feb-70 Mar-73 Apr-76 May-79 Jun-82 Jul-85 Aug-88 Sep-91 Oct-94 Nov-97 Nov-00 Nov-03 Nov-06 Nov-09
Continuing Jobless Claims. Encouragingly, continuing claims continue to move steadily lower and are
now below previous cyclical peaks. The 4-week moving average fell to 3.487 million at the end of
January versus 3.61 million on 12/31/11. Continuing claims are ~52.5% below the recent cyclical peak in
early 2009 (see figure below).
Continuing Jobless Claims
Note: Gray bars denote NBER recessions
Source: U.S. Department of Labor, Bureau of Labor Statistics; National Bureau of Economic Research
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
Jan-67 Feb-70 Mar-73 Apr-76 May-79 Jun-82 Jul-85 Aug-88 Sep-91 Oct-94 Nov-97 Nov-00 Nov-03 Nov-06 Nov-09
Unemployment Rate. The U.S. unemployment rate (which is based on a separate survey) improved by
20 bps in December to 8.3%, below the 8.5% consensus. Indeed, the unemployment rate is now at its
lowest point of the current cycle (post-recession) and (positively) was a function reflected a larger labor
pool (in other words, the decline was not a function of potential job seekers exiting the labor pool -- i.e.,
discouraged workers). The improvement also drove a decline in the U-6 unemployment rate (which
includes involuntary part-time employment and other underutilized labor) to 15.2% (-40 bps
sequentially).The unemployment rate still remains well above the previous cyclical peaks of 6.3% in
June 2003, but is approaching the 7.8% rate reported in June 1992.
February 3, 2012 | Facility Services
Robert W. Baird & Co.
12
Civilian Unemployment Rate (persons 16 years of age and older)
Note: The solid grey bars indicate recessions, as determined by the National Bureau of Economic Research
Source: U.S. Department of Labor, Bureau of Labor Statistics
0
2
4
6
8
10
12
14
16
18
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
U3 rate ("Official" unemployment rate)
U6 rate (Total unemployed, plus all marginally attached workers)
February 3, 2012 | Facility Services
Robert W. Baird & Co.
13
Uniform Stock Investment Perspectives
■ We rate G&K Services (GKSR; $38 price target) at Outperform. F1Q12 results (January) were
ahead of expectations, with better-than-expected organic growth and SG&A leverage offsetting gross
margin pressure (merchandise cost). While we recognize that F2012's gross margin pressures and
the likelihood of slowing top-line momentum on more difficult comparisons creates fewer immediate
catalysts, our valuation continues to contemplate what we see as opportunity for multi-year value
creation over the next 2-3 years. With continued opportunity to drive additional operating efficiencies,
solid execution, achievable forward estimates and reasonable valuation, we highlight what could
prove to be stronger-than-expected results, particularly in F2013.
- We believe investors are best served by taking a multi-year look at GKSR’s earnings power. In
addition, we believe outsized earnings growth potential at GKSR relative to peers continues to
justify a growth multiple for the stock. Our $38 price target assumes an essentially constant multiple
of 7.3x EBITDA and 15.0x earnings, below the stock's historical average of ~8.0x recognizing,
perhaps, lower long-term growth rates for the industry relative to history, but still discounting above
average EPS growth potential over the next several years with an implied PEG ratio of just 0.75x
(we assume ~20% EPS growth through F2013).
- We also note that our DCF model supports a price target in the upper-$30s (on full realization of
management's 10% EBIT margin target), supporting the value of the franchise beyond simple
multiples analysis
- Risks to our price target include a highly competitive industry, employment trends, and energy price
fluctuations.
■ We rate Cintas (CTAS; $38 price target) at Outperform. F2Q12 earnings in December
demonstrated meaningful momentum, with management's view for the balance of the year improved.
Importantly, CTAS sees runway for additional margin gains ahead, with recent performance providing
confidence and the company's strong cash flow and healthy balance sheet likely providing
opportunities for additional return of capital initiatives. We see conservative guidance setting the
stage for additional beat-and-raise quarters as the most likely catalyst for the stock today.
- Our $38, 12-month price target reflects 7.5x FTM EBITDA and 14.8x EPS roughly consistent with
current levels but at a discount to five-year historical levels of 8.8x and 18.3x, respectively,
recognizing more mature industry dynamics and secular multiple compression.
- Risks to our price target include a highly competitive industry, employment trends, energy and scrap
paper price fluctuations and acquisition integration.
■ We rate UniFirst (UNF; $68 price target) at Outperform. Our upgrade from Neutral to Outperform
last quarter was primarily based on valuation, but also due to opportunities for balance sheet
deployment. While the relative valuation gap versus peers (which formed the basis of our upgrade)
has likely closed, we continue to see modest upside through continued execution, cyclical tailwinds,
and, importantly, deployment of a potentially underlevered balance sheet. Indeed, return-of-capital
initiatives and/or M&A could create shareholder value through strategic deployment (we see up to
$400 million of incremental balance sheet capacity, or $20/share) and is the primary catalyst for the
stock today, in our opinion.
- Our $68 price target reflects an essentially constant 6.2x FTM EBITDA multiple on our estimates
12-months from today. We believe current multiples are appropriate, at a modest premium to
historical levels but at a discount to peers near 7.5x EBITDA (we note UNF's dual-class share
structure has historically driven a ~1-2 point valuation discount versus peers), but reflective of
positive cyclical momentum.
- In addition, we note that adjusted for UNF's underlevered balance sheet, the stock's forward
earnings multiples (ex-cash) is closer to 10x versus a ~13x historical average. While we are hesitant
to ascribe the full value of UNF's potential balance sheet to valuation, we do note that it likely
February 3, 2012 | Facility Services
Robert W. Baird & Co.
14
provides support for the stock and remains an important driver of potential value creation, keeping
risk/reward biased higher.
- Risks to our price target include a highly competitive market, employment trends, energy price
fluctuations and a 10:1 super-voting dual-class insider share structure.
February 3, 2012 | Facility Services
Robert W. Baird & Co.
15
Appendix - Important Disclosures and Analyst Certification
Covered Companies Mentioned
All stock prices below are the February 2, 2012 closing price.
Cintas Corporation (CTAS - $37.33 - Outperform)G&K Services, Inc. (GKSR - $33.45 - Outperform)UniFirst Corporation (UNF - $61.41 - Outperform)(See recent research reports for more information)
Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q18
16
24
32
40
2009 2010 2011 2012
06/01/09N:$27
09/23/09U:$28
12/23/09U:$26
02/17/10U:$22
07/21/10N:$28
09/22/10N:$30
12/22/10N:$32
03/14/11O:$34
03/23/11O:$35
07/20/11O:$36
09/12/11O:$34
12/21/11O:$38
Rating and Price Target History for: Cintas Corporation (CTAS) as of 02-02-2012
Created by BlueMatrix
Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q18
16
24
32
40
2009 2010 2011 2012
04/29/09N:$26
06/01/09N:$22
08/07/09N:$21
09/23/09U:$21
10/28/09N:$23
01/27/10N:$26
04/28/10N:$28
06/15/10N:$23
08/18/10N:$24
11/02/10N:$30
01/19/11O:$37
02/02/11O:$38
05/03/11O:$40
08/17/11O:$37
01/31/12O:$38
Rating and Price Target History for: G&K Services, Inc. (GKSR) as of 02-02-2012
Created by BlueMatrix
February 3, 2012 | Facility Services
Robert W. Baird & Co.
16
Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q10
15
30
45
60
75
2009 2010 2011 2012
06/01/09N:$37
06/02/09N:$36
07/02/09N:$39
09/23/09U:$42
10/29/09U:$43
01/07/10O:$59
04/01/10O:$60
07/01/10O:$51
10/20/10O:$54
01/05/11O:$57
01/19/11N:$58
03/30/11N:$60
06/30/11N:$61
09/12/11N:$57
10/19/11O:$60
01/05/12O:$68
Rating and Price Target History for: UniFirst Corporation (UNF) as of 02-02-2012
Created by BlueMatrix
1 Robert W. Baird & Co. Incorporated makes a market in the securities of CTAS, GKSR and UNF.
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