Robert W Baird is the premier financial institution tracking the uniform market. Here is their May Perspective on the outlook for uniform market and the industries we serve. It's good news!
Special thanks to Andrew Wittmann at Baird for allowing us to post.
As part of Tees Valley Unlimited’s role as Local Enterprise Partnership for the area we aim to provide you with a Tees Valley wide view of economic trends, business news stories and developments.
We have therefore put together the attached “Tees Valley Economic Briefing” which brings together up to date information about the Tees Valley economy. We have tried to present the information in a concise format which we hope will find is quick and easy to digest.
Baird September 2012 Facility Services ReportDavid Crace
RW Baird is the leading financial institution tracking the uniform industry. This is the September 2012 update which hallmarks a downward shift in outlook.
Robert W Baird provides market and company analysis in core sectors served by Red Kap. Check out their thoughts on the economy, our sectors and key companies.
As part of Tees Valley Unlimited’s role as Local Enterprise Partnership for the area we aim to provide you with a Tees Valley wide view of economic trends, business news stories and developments.
We have therefore put together the attached “Tees Valley Economic Briefing” which brings together up to date information about the Tees Valley economy. We have tried to present the information in a concise format which we hope will find is quick and easy to digest.
Baird September 2012 Facility Services ReportDavid Crace
RW Baird is the leading financial institution tracking the uniform industry. This is the September 2012 update which hallmarks a downward shift in outlook.
Robert W Baird provides market and company analysis in core sectors served by Red Kap. Check out their thoughts on the economy, our sectors and key companies.
Federal Reserve White Paper on ManufacturingDavid Crace
Resource document on the manufacturing industry over the last 20 years. Very insightful perspective, facts and figures on the impact of offshoring, efficiency gains, etc.
This report, published 8 times annually, summarizes current economic conditions across the Fed's Districts. Lots of regional economic perspective. Overall this report affirms that the economy is recovering at a very slow pace.
Apresentação Pública da Pós-graduação em Marketing Territorial na Escola Superior de Tecnologia de Abrantes, por Luís Nunes.
Apresentação do tema "Venturing beyond the Backyard", por Gavin Eccles.
This quarterly release from the Commerce Department is a deep dive into the US Gross Domestic Product. Lots of industry level data, historical perspective, etc. The punchline? US economy continues its very slow growth.
General Electric 14General ElectricFinanc.docxbudbarber38650
General Electric 14
General Electric
Financial Analysis
Nicole Henry
EXECUTIVE SUMMARY
General Electric has been in business for over a century now and the inception of the dynamo has been the key to one of the largest global names. The company has been able to financially provide for the electrical and then today in the financial sector as well. This is reflected in the financial position of the company which has performed in the double digits during tough times. When analyzing the financial position of the company, it is evident that the performance that the company had been gaining for over a period has now started seeing a settlement impact. This means that the growth perspective that the company was seeing over the last couple of years have now subsided. The impact of growth is visible in the current year where the company’s financial position took a dip. Although the dip is the settlement of the exceeding performance; and has a subsided impact from the financial crunch in the previous decade around the globe.
ANALYSIS OVERVIEW
In order to analyze a company which has its operations in different business factions there are certain questions that need to be raised. The first question is that with such a gigantic business across the globe, is it feasible to break the financial analysis on a business wise or is the company feasible to be analyzed in a single entity perspective. The perspective reveals that the company analyzes its performance as a single entity and hence all the stakeholders are considered under a single arena. Thence, the review has to be taken in the single entity perspective. Along with this, there is a portion of performance review which is to set the trends for the future. The perspective cannot be taken as the downward trend, but this has to be taken as a moving average of the recent years. The financial analysis will reveal what factions of the company underperformed and led to a decrease in the financial position. The financial ratios used in the study reveal the position and performance of the company in the perspective of how each pillar has performed. This ratio analysis will also be an intricate combination of the businesses of the company to augment each pillar.
ASSUMPTIONS
The basis for carrying out the financial analysis for the company involves the changing trends of the company and the industry itself. Although the company’s financial positions appear to present strong performance, the underlying belief is that the company is now in a position where the product and service demand is increasing. Connecting the dots, the company is carrying out the sales with controlled receivables. The assumption set here is that the company’s growth in sales trends for products and services is not driven through increasing credit exposure. Along with this, there is an increased trend for cost hikes. This is assumed to be driven from the pricing positions in the market and the underlying costs requir.
Not as bad as feared. Poor though the results were, the May results season was
not as bad as feared. In fact, there were reasons to be encouraged. The revision
ratio improved from 0.43x in Feb 09 to 0.6x, meaning that the earnings downgrade
momentum is not as lopsided as before. Some 60% of companies met
expectations (43% previously) and 25% failed to deliver (40% before). 15% did
better than expected, a slight pullback from 17% during the Feb results season. In
terms of sector performance, six disappointed while only two were above
expectations.
• EPS forecast surprisingly raised. More significant than the actual number of
companies that surpassed or missed expectations is the fact that 2009 and 2010
EPS have been raised, rather than cut. This is a pleasant surprise. Since the Feb
results season, 2009 EPS contraction has been reduced from 8% to around 6%
while 2010 EPS growth has been raised from 16% to 19%. Upgrades came largely
from the plantation sector due to firm CPO prices, as well as big caps such as
Axiata and Maybank, which more than offset letdowns from smaller caps.
• The worst could be over. In our Apr strategy when we upgraded Malaysia to
Overweight, we thought 2Q could provide a buying opportunity due to 1) the
expected poor results season, and 2) announcement of a sharp contraction in
1Q09 GDP. We were only partially right on the first count as 1Q09 results have
turned out to be not as bad as expected and did not present any major shocks or
earnings downgrades. This means that there is a good chance we are past the
worst as upcoming quarters may be more balanced and EPS cuts could have
bottomed out. Fundamentally, this is hugely positive for the market.
• New KLCI target of 1,220. Although our economics team was spot on about 1Q
GDP being weak – it sank 6.2% – the market took the bad news in its stride. This
is an indication of how far market confidence has improved in the past two
months. We continue to believe the gradual reinvestment of institutional funds’
spare cash will sustain the market rebound in 2H09. In view of the better-thanexpected
1Q results season, continued positive newsflow during PM Dato’ Sri
Najib Razak’s first 100 days in office and the gradual return of foreign funds to the
market, we upgrade our year-end KLCI target from 1,060 to 1,220 points after
removing the 10% discount to its 3-year moving average P/E of 15x. We maintain
our OVERWEIGHT stance on Malaysia and our preference for cyclical bombedout
sectors including construction, building materials, property and oil & ga
Supplemental information published for AEP’s quarterly earnings conference call with financial analysts on Jan. 28, 2011.
For more information, log on to AEP.com/Investors
October 2016 U.S. employment update and outlookJLL
While September saw relatively average job growth, market fundamentals are steady and momentum remains as wage growth rose once again and consumer confidence continued its rise.
The Hudson Update is a quarterly report on employee & HR trends in the Midlands and North of England - and for the first time, we also include hiring expectations for the Home Counties and South West. This update is the result of surveying nearly 1,000 hiring managers across the English regions. It is the latest in the series which provides regular and comparable information and statistics helping companies to plan and benchmark their own employment activities.
Similar to Baird Perspective on Uniform Industry: Good News (20)
Is your favorite ring slipping and sliding on your finger? You're not alone. Must Read this Guide on What To Do If Your Ring Is Too Big as shared by the experts of Andrews Jewelers.
Have you ever wondered about the lost city of Atlantis and its profound connection to our modern world? Ruth Elisabeth Hancock’s podcast, “Visions of Atlantis,” delves deep into this intriguing topic in a captivating conversation with Michael Le Flem, author of the enlightening book titled “Visions of Atlantis.” This podcast episode offers a thought-provoking blend of historical inquiry, esoteric wisdom, and contemporary reflections. Let’s embark on a journey of discovery as we unpack the mysteries of ancient civilizations and their relevance to our present existence.
Care Instructions for Activewear & Swim Suits.pdfsundazesurf80
SunDaze Surf offers top swimwear tips: choose high-quality, UV-protective fabrics to shield your skin. Opt for secure fits that withstand waves and active movement. Bright colors enhance visibility, while adjustable straps ensure comfort. Prioritize styles with good support, like racerbacks or underwire tops, for active beach days. Always rinse swimwear after use to maintain fabric integrity.
MRS PUNE 2024 - WINNER AMRUTHAA UTTAM JAGDHANEDK PAGEANT
Amruthaa Uttam Jagdhane, a stunning woman from Pune, has won the esteemed title of Mrs. India 2024, which is given out by the Dk Exhibition. Her journey to this prestigious accomplishment is a confirmation of her faithful assurance, extraordinary gifts, and profound commitment to enabling women.
Johnny Depp Long Hair: A Signature Look Through the Yearsgreendigital
Johnny Depp, synonymous with eclectic roles and unparalleled acting prowess. has also been a significant figure in fashion and style. Johnny Depp long hair is a distinctive trademark among the various elements that define his unique persona. This article delves into the evolution, impact. and cultural significance of Johnny Depp long hair. exploring how it has contributed to his iconic status.
Follow us on: Pinterest
Introduction
Johnny Depp is an actor known for his chameleon-like ability to transform into a wide range of characters. from the eccentric Captain Jack Sparrow in "Pirates of the Caribbean" to the introspective Edward Scissorhands. His long hair is one constant throughout his evolving roles and public appearances. Johnny Depp long hair is not a style choice but a significant aspect of his identity. contributing to his allure and mystique. This article explores the journey and significance of Johnny Depp long hair. highlighting how it has become integral to his brand.
The Early Years: A Budding Star with Signature Locks
1980s: The Rise of a Young Heartthrob
Johnny Depp's journey in Hollywood began in the 1980s. with his breakout role in the television series "21 Jump Street." During this time, his hair was short, but it was already clear that Depp had a penchant for unique and edgy styles. By the decade's end, Depp started experimenting with longer hair. setting the stage for a lifelong signature.
1990s: From Heartthrob to Icon
The 1990s were transformative for Johnny Depp his career and personal style. Films like "Edward Scissorhands" (1990) and "Benny & Joon" (1993) saw Depp sporting various hair lengths and styles. But, his long, unkempt hair in "What's Eating Gilbert Grape" (1993) began to draw significant attention. This period marked the beginning of Johnny Depp long hair. which became a defining feature of his image.
The Iconic Roles: Hair as a Character Element
Edward Scissorhands (1990)
In "Edward Scissorhands," Johnny Depp's character had a wild and mane that complemented his ethereal and misunderstood persona. This role showcased how long hair Johnny Depp could enhance a character's depth and mystery.
Captain Jack Sparrow: The Pirate with Flowing Locks
One of Johnny Depp's iconic roles is Captain Jack Sparrow from the "Pirates of the Caribbean" series. Sparrow's long, dreadlocked hair symbolised his rebellious and unpredictable nature. The character's look, complete with beads and trinkets woven into his hair. was a collaboration between Depp and the film's costume designers. This style became iconic and influenced fashion trends and Halloween costumes worldwide.
Other Memorable Characters
Depp's long hair has also been featured in other roles, such as Ichabod Crane in "Sleepy Hollow" (1999). and Roux in "Chocolat" (2000). In these films, his hair added a layer of authenticity and depth to his characters. proving that Johnny Depp with long hair is more than a style—it's a storytelling tool.
Off-Screen Influenc
From Stress to Success How Oakland's Corporate Wellness Programs are Cultivat...Kitchen on Fire
Discover how Oakland's innovative corporate wellness initiatives are transforming workplace culture, nurturing the well-being of employees, and fostering a thriving environment. From comprehensive mental health support to flexible work arrangements and holistic wellness workshops, these programs are empowering individuals to navigate stress effectively, leading to increased productivity, satisfaction, and overall success.
La transidentité, un sujet qui fractionne les FrançaisIpsos France
Ipsos, l’une des principales sociétés mondiales d’études de marché dévoile les résultats de son étude Ipsos Global Advisor “Pride 2024”. De ses débuts aux Etats-Unis et désormais dans de très nombreux pays, le mois de juin est traditionnellement consacré aux « Marches des Fiertés » et à des événements festifs autour du concept de Pride. A cette occasion, Ipsos a réalisé une enquête dans vingt-six pays dressant plusieurs constats. Les clivages des opinions entre générations s’accentuent tandis que le soutien à des mesures sociétales et d’inclusion en faveur des LGBT+ notamment transgenres continue de s’effriter.
Unique Wedding Bands For Women Who Want To Stand Out.pptx
Baird Perspective on Uniform Industry: Good News
1. Business Services Research
June 3, 2011
Facility Services
Uniform Wearer Growth Remains Better Than Broader National Employment
Trends
Andrew J. Wittmann, CFA Action
awittmann@rwbaird.com Despite headline disappointment in the May BLS data, strong growth in
414.298.1898
uniform-wearing employment continues, with year-over-year growth rates
Justin P Hauke
. more than double the broader economy. We note that uniform-wearing industries
jhauke@rwbaird.com were slow to post employment gains earlier this cycle and have only recently begun
312.609.5485 adding headcount. Thus, we continue to see upside in uniform rental stocks as
incremental wearers boost utilization rates, with recent commodity price declines
providing additional support for earnings.
Please refer to Summary
Appendix - Important
• May employment disappoints but shouldn't be a surprise. Total nonfarm
Disclosures and payrolls increased by 54,000, well below expectations of +165,000 and consistent
Analyst Certification. with similar disappointing employment-related reports in recent weeks.
- Unemployment rate rose to 9.1% (versus the 8.9% consensus). Positively, the
spike in the unemployment rate was driven primarily by a surge in labor market
entrants (a positive).
• Baird's Add/Stop Index specific to uniform rental-related employment remains
healthy, but more modest than recent gains, increasing +26,000.
- Importantly, YOY job growth related to uniform wearers is increasing at
more than twice the rate of the economy as a whole and is now at its
highest level since 2006, a crucial point underpinning our positive view on
uniform stocks.
- Nonetheless, we note that May gains were below the +50,000-80,000 gains in
recent months.
• Macroeconomy likely still constructive for uniform rental stocks but recent
deceleration is disappointing. Our checks suggest moderating price competition
in uniform rental (some markets are even increasing), and anecdotal commentary
suggests uniform companies are beginning to see high-margin positive add/stops in
their business.
- In addition, recent declines in commodity cost pressures (especially
cotton) should provide additional support beyond fixed cost leverage.
• G&K (Outperform): We believe Street estimates, broadly, underappreciate
GKSR's underlying earnings growth potential from even modest top-line growth.
Combined with solid progress on the turn-around strategy, solid cash flow, and a
likely increase in return of capital to shareholders, we see relative upside to the
stock.
• Cintas (Outperform): Top-line momentum has accelerated, driving margin and
earnings leverage as previous investments in sales staff are paying off. In addition,
we believe last month's $500M bond offering could provide meaningful accretion if
deployed and we are encouraged by recent efforts to expand the company’s
higher-growth hygiene/chemicals business through strategic partnerships with
established industry suppliers (e.g., Diversey).
• UniFirst (Neutral): UniFirst continues to execute admirably, above peer levels.
However, we believe expectations for strong execution are largely priced into the
stock, increasing the risk, though we do see modest upside to shares.
2. Facility Services
June 3, 2011
Details
Remain Positive on Uniform Rental Stocks Despite
Disappointing Headline Employment Report
Despite headline disappointment in the May BLS data, strong growth rates in
uniform-wearing employment continues (and is accelerating), with growth rates more than
double that of the broader economy. We note that uniform-wearing industries were slow
to post employment gains earlier this cycle and have only recently begun adding
headcount.
Indeed, job growth in uniform-related wearers is now increasing at more than twice
the rate of the economy as a whole and is now at its highest level since 2006, a
crucial point underpinning our positive view on uniform stocks. The figure below
demonstrates this dynamic, a point that we stress is not reflected in a cursory view of the
data.
Baird Add/Stop Index (YOY Change)
3.00%
2.00% BLS Employment
1.00% Baird Add/Stop Index
0.00%
-1.00%
-2.00%
-3.00%
-4.00%
-5.00% Growth in Baird Add/Stop
-6.00% Index employment is
outpacing total NFP
-7.00% employment - first time
since early 2007
-8.00%
Jan-07
Mar-07
Jul-07
Sep-07
Nov-07
Jan-08
Mar-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
Jul-10
Sep-10
Nov-10
Jan-11
Mar-11
May-07
May-08
May-09
May-10
May-11
Source: Bureau of Labor Statistics and Baird Research
Thus we continue to see upside in uniform rental stocks as incremental wearers at
existing rental accounts boost utilization rates, generating highly profitable incremental
margins, with recent commodity price declines providing additional support for earnings.
Indeed, cotton prices have declined 23% since their March peak, a statistic which we
believe is unlikely reflected in most Street estimates.
2
Robert W. Baird & Co.
3. Facility Services
June 3, 2011
U.S. Cotton Prices, spot ($/lb)
$2.50 160%
U.S. Cotton (spot), $/lb 140%
U.S. Cotton (Spot), YOY (right)
$2.00 120%
100%
$1.50 80%
60%
$1.00 40%
20%
$0.50 0%
-20%
$0.00 -40%
2006 2007 2008 2009 2010 2011
Source: FactSet Research Systems
Perhaps more importantly, we believe the significant operating leverage inherent in the
businesses can well-offset input cost pressures in even a modest labor market recovery.
We believe significant excess capacity remains at the public uniform companies which
should provide opportunity to improve fixed asset utilization rates as employment further
improves (even modestly).
We also note that recent employment momentum has been slow to materialize in organic
growth rates so far. To date, organic growth has been led by lower-margin new account
gains and service additions rather than by higher-margin additions to existing accounts.
We believe the labor data since February could potentially provide the next leg in
earnings growth for the uniform stocks and we have begun to hear anecdotal
commentary suggesting improvement in add/stop (i.e., additions at existing accounts)
rates. However, if employment growth continues to decelerate, we could turn more
cautious in our recommendation.
Historically, the uniform sector has been an effective way to invest in early-cycle stocks
(the stocks historically bottom 12 months before an employment inflection) or to play an
expanding economy (stocks also tend to outperform mid to late cycle when the rate of job
growth is higher). Indeed, until recently, stock performance at the uniform rental
companies had lagged as the economy moved into more advanced stages of the
recovery, following strong outperformance in the stocks prior to the August 2009
employment bottom, confirming the stock's early-cycle nature.
However, since February the market has generally been positively surprised with the
monthly jobs numbers (with the exception of this month's disappointing release). This
phenomenon has historically allowed for uniform stock outperformance for a period of
roughly 13-24 months. For perspective, current cycle employment bottomed in
September 2009 (19 months ago). (Note: Past performance is no guarantee of future
results.)
3
Robert W. Baird & Co.
4. Facility Services
June 3, 2011
Uniform Stock Performance
One-Month Percentage Price Change YTD Percentage Price Change
C intas C intas
U n iFirs t S & P 500
U n iform Ind e x U niform Ind ex
S & P 500 G & K S ervices
G & K S e rv ic es U n iFirs t
-8% -6% -4% -2 % 0% 2% 4% -10 % -5% 0% 5% 10% 1 5% 20%
Three-Month Percentage Price Change Trailing 12 Months Percentage Price Change
C in tas G & K S ervic es
U niform Inde x C in tas
S & P 500 U niform Index
G & K S e rv ic es S & P 500
U niFirst U niFirs t
-1 0% -5% 0% 5% 10 % 15% 20% 0% 5% 1 0% 15% 20% 25% 30% 35 %
Source: FactSet Research Systems
Indeed, now that we are seeing consistent employment gains within uniform-wearing
sectors, we believe uniform rental companies have become a more compelling
investment (and, indeed, offer lower beta exposure to broader macroeconomic
headwinds given the businesses' recurring revenue stream and solid free cash flow
generation). The YTD share performance at in particular (the largest, and most liquid of
the uniform rental stocks), suggests to us that the late cycle thesis in the uniform stocks
may be gaining momentum, providing conviction in our Outperform rating in those stocks.
We also note that valuation multiples for the group appear to have stabilized, particularly
at (now posting modest expansion), following several years of decline, which we believe
suggests moderate upside now that employment growth rates are improving within our
Add/Stop Index. We also believe that should trade at a premium to the group, which we
believe is justified by the company's outsized earnings growth potential versus peers
resulting from its on-going turnaround strategy focused on improving margins to
peer-levels.
trades at a discount to peers, which we believe reflects a dual-class share structure and
limited float, but is consistent with its historical average (indeed, a slight premium on an
earnings basis), which we believe captures 's strong recent execution, balanced by
emerging company-specific margin pressures from inventory .
Uniform Industry Valuation
Price Price Target Rating EV/EBITDA, ftm P/E
Company Ticker FTM AVG FTM AVG
Cintas CTAS $31.99 $35 O 7.9x 9.0x 17.5x 18.7x
G&K Services GKSR $31.10 $40 O 7.3x 8.2x 16.0x 17.1x
UniFirst UNF $51.48 $60 N 5.7x 5.8x 14.1x 13.6x
Average: 7.0x 7.7x 15.9x 16.5x
As of 06/03/2011
Source: FactSet Research Systems and Baird estimates
4
Robert W. Baird & Co.
5. Facility Services
June 3, 2011
May Employment Report Disappoints, Consistent with Recent
Derivative Data
Total nonfarm payrolls increased by 54,000 in May, well below expectations of +165,000
and consistent with similar disappointing employment-related reports in recent weeks (in
other words, the report was not surprising, but confirmatory). Private sector payrolls also
retreated, posting a +83,000 gain, well below the +251,000 gain in April, which was the
largest single month gain in the report since February 2006. Furthermore, economists
predict seasonally lower employment gains in the data in 2H11, as the BLS' birth/death
adjustment factor (an adjustment to the data to reflect small firms not captured in the
survey data) is expected to be more modest in 2H11.
Forward-looking employment indicators, however, suggest stability, with total average
hours worked holding constant at 34.3 hours in May (essentially constant since
February). The private employment diffusion index also declined to 53.6 (from 65.0 in
April). Note, however that a reading above 50 indicates sequential improvement in the
data. Thus, while the lower sequential reading indicates that employment acceleration
has slowed, overall growth rates remain positive (and the outlook stable).
Baird Add/Stop Index Growth Outpacing Broader Employment Gains Despite
Disappointing Headline Data
Baird's Add/Stop Index specific to uniform rental-related employment remains generally
healthy; however, we saw more modest gains this month with our Index increasing
+26,000. The May gains were below the +50,000-80,000 gains we have seen in recent
months; however, the general trend in the data remains positive, with average
year-to-date employment gains in 2011 consistent with previous cyclical averages of
+65,000 and +54,000 (see figure below).
Baird Add/Stop Index
4% 200
2011 Average = 62k
Average = 65k Average = 54k
2% 100
0% 0
-2% (100)
Cycle Average = 38k
-4% (200)
-6% Baird Add/Stop Indicator Monthly Job Gains/Losses (000), right (300)
Baird Add/Stop Indicator YOY Growth Rate, left
-8% (400)
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Source: Bureau of Labor Statistics and Baird Research
In addition, we note that the YOY growth rate in Add/Stop employment categories
continues to outpace the broader economy for the first time since late 2006/early
2007 (and is now more than double the rate of general economic growth). This is a
critical element of the data as uniform employment has lagged broader employment
categories throughout the recovery until recently (indeed, until February 2011). April
Add/Stop employment increased 1.6% YOY versus the just 0.7% YOY gain in total
non-farm payroll employment, which is a key reason why we remain constructive on the
uniform stocks.
5
Robert W. Baird & Co.
6. Facility Services
June 3, 2011
Employment gains were also positive across most sectors within our Add/Stop Index with
the exception of construction and repair and maintenance, both of which have been drags
to the data over the past several months. Gains were particularly concentrated within the
Food Services and Drinking Places industry (similar to last month) which has been a key
theme throughout this recovery (we believe this has also aided Direct Sale purchases at
the uniform rental companies). We also think that gains in Food Services and Drinking
Places should benefit many of the uniform rental companies' ancillary offerings, such as
chemicals, hygiene products, shop towels and linens. For perspective, ancillary offerings
at the uniform rental companies encompass roughly 50% of total rental revenue and are
meaningful parts of the overall business, though garment rental is still the largest
individual category.
The figure below shows the absolute job gains/losses within several of the primary
uniform-wearing industries comprising our Index over the last month.
Baird Add/Stop Index Component Industries: 1-Month Employment Change (000s)
Specialty Trade Contractors (7)
Repair and Maintenance (6)
W holesale Trade - Nondurable Goods (1)
Gasoline Stations (1)
Chemicals 0
W holesale Trade - Durable Goods 2
Truck Transportation 2
Fabricated Metal Products 3
Machinery 4
Food and Beverage Stores 5
Motor Vehicle and Parts Dealers 6
Food Manufacturing 7
Food Services and Drinking Places 14
1-month Employment Change (000s)
Source: Bureau of Labor Statistics and Baird Research
Recent Derivative Employment Data Has Been Similarly Disappointing
Similar to this morning's BLS report, employment data over the past few weeks has been
generally disappointing, indicating slowing momentum and still-elevated new jobless
claims.
For example, this week’s ADP employment report indicated net job growth of just
38,000 in May, well below expectations (+180,000) and a reduction from average gains of
~200,000 since December. Recall that the ADP report tracks employment gains/losses in
the U.S. private sector only.
6
Robert W. Baird & Co.
7. Facility Services
June 3, 2011
Total Nonfarm Private Payrolls, by Firm Size
400 117,000
200
115,000
-
113,000
(200)
111,000
(400)
Large (499+)
Medium (50-499) 109,000
(600) Small (1-49)
Total Employment, millions (right)
107,000
(800)
(1,000) 105,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: ADP Employment Report
Goods-producing sectors (greater uniform customer exposure) also moderated,
posting their first decline since October 2010, falling by 10,000. Job growth in the
service-producing sector also moderated significantly, increasing 48,000 in May versus a
gain of 141,000 in April (and +165,000 in March). Job gains in May continue to be
concentrated among small (1-49 employees) and medium (50-499 employees) firms with
large firms posting a modest decline.
Initial jobless claims remain elevated with the 4-week moving average still above the
key 400,000 level this month, which is viewed as indicative of sustainable job growth.
Furthermore, claims have generally overshot expectations, which is concerning. Still,
initial jobless claims are 34% below their prior cycle peak of 658,750 in March 2009 and
did post a modest sequential over the past month (see figure below).
Initial Jobless Claims
700,000
Initial Jobless Claims (4-wk MA)
650,000
600,000
550,000
500,000
450,000
400,000
350,000
300,000
250,000
Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11
Note: The solid red line indicates the level of jobless claims historically associated with net employment growth
Source: U.S. Department of Labor, Bureau of Labor Statistics
Continuing jobless claims held steady in May (despite the increase in the
unemployment rate), with the 4-week moving average increasing modestly from 3.727
million at the end of April to 3.737 million currently. This week’s continuing claims
decreased by 1,000, suggesting little change in structural unemployment rates.
7
Robert W. Baird & Co.
8. Facility Services
June 3, 2011
Continuing Jobless Claims
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0
Jan-67 Jan-72 Jan-77 Jan-82 Jan-87 Jan-92 Jan-97 Jan-02 Jan-07
Source: U.S. Department of Labor, Bureau of Labor Statistics
The unemployment rate (which is based on a separate survey) increased 10 bps
sequentially to 9.1% in May (versus expectations that the unemployment rate would
decline to 8.9%), though we note can be viewed positively, as the increase was
accompanied by an increase in the labor force--potentially indicating better job prospects.
Indeed, 272,000 people entered the labor force in May, the highest monthly increase
since August 2010. The U-6 unemployment rate (which includes involuntary part-time
employment and discouraged workers – i.e., unemployed workers who have ceased
looking for employment) also declined by 10 bps in May to 15.8%, and has steadily
declined from a rate of 17% in November 2010.
Despite recent employment gains, the unemployment rate remains well above the
previous cyclical peaks of 6.3% in June 2003 and 7.8% in June 1992. Eventually,
declines from this high unemployment rate will be a large opportunity for the uniform
companies, in our view.
Civilian Unemployment Rate (persons 16 years of age and older)
12
10
8
6
4
2
0
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
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
Uniform Stock Investment Perspectives
• We rate G&K Services (-$31.10; $40 price target) at Outperform. We believe Street
estimates, broadly, GKSR's underlying earnings growth potential from even modest
8
Robert W. Baird & Co.
9. Facility Services
June 3, 2011
top-line growth. Furthermore, G&K reported better-than-expected F3Q11 earnings in
May, driven by strong top-line results (above our estimate) and much
better-than-expected margin expansion. Investors are gaining confidence in
management's targeted “10/10” plan to achieve 10% operating margins and ROIC by
F2014, which should unlock material value creation over the next several years.
Combined with solid cash flow, and a likely increase in return of capital to shareholders
(likely through a dividend increase later this summer), we see relative upside to the
stock.
Against this backdrop, we continue to believe investors are best served by taking a
multi-year look at GKSR’s ability to create value by bridging the profitability gap
versus peers over time. In addition, we believe outsized earnings growth potential at
GKSR relative to peers continues to justify a growth multiple for the stock. Our $40
price target is supported by our DCF analysis which incorporates management’s
long-term profitability targets and by the application of an 8.0x forward EV/EBITDA
(in line with the stock’s historical average multiple of 8.2x and a slight premium to
peers and consistent with what we see as above-average earnings growth
potential). Our price target also implies a 17.9x NTM P/E. Risks to our price target
include a highly competitive industry, employment trends, energy price fluctuations
and acquisition integration.
• We rate Cintas (CTAS-$31.66; $35 price target) at Outperform. Top-line momentum
has accelerated, driving margin and earnings leverage as previous investments in
sales staff have begun to pay off. Although rising commodity costs remain a source of
caution (though have recently declined), with broad-based top-line improvement,
increasing capital allocation towards M&A, and moderating pricing pressure, we
believe CTAS offers lower-risk leverage to a slowly improving employment market. In
addition, we believe a $500M bond offering in May 2011 could also provide meaningful
accretion (we estimate up to $0.12 in F2012) from share repurchases or other capital
deployments and we are encouraged by recent efforts to expand the company’s
higher-growth hygiene/chemicals business through strategic partnerships with
established industry suppliers (e.g., Diversey).
Our $35 price target assumes modest (essentially flat) multiple expansion to 7.7x
FTM EBITDA, below the company’s historical average of 9.2x but which we believe
more fully reflects the industry’s challenging fundamentals and a slower growth rate,
with downside supported by the company’s $500M share repurchase authorization.
We also see upside to our price target to the extent CTAS can deploy its balance
sheet toward additional accretive opportunities. Risks include a highly competitive
market, employment trends, energy and scrap paper price fluctuations.
• We rate UniFirst (UNF-$51.10; $60 price target) at Neutral. UniFirst continues to
execute at a very high level, which we believe was well appreciated by the market
throughout the downturn. However, with margin pressures building from (still high)
commodity costs and the company's inventory cycle versus peers providing a
counterbalance to cyclical tailwinds at GKSR/CTAS, we view risk/reward as balanced.
That being said, we do see modest upside to the stock.
Our $60 price target assumes modest multiple expansion to 6.1x FTM EBITDA, a
modest premium to the stock’s 5.8x average and current levels, recognizing the
improving investment landscape and UNF's recent performance versus peers but
balanced by what we see as emerging risk. Risks include a highly competitive
industry, employment trends, energy price fluctuations, acquisition integration risks,
and 10:1 super-voting insider shares.
9
Robert W. Baird & Co.
10. Facility Services
June 3, 2011
Appendix - Important Disclosures and Analyst Certification
Rating and Price Target History for: Cintas Corporation (CTAS) as of 06-02-2011
07/16/08 09/19/08 12/18/08 12/22/08 06/01/09 09/23/09 12/23/09 02/17/10 07/21/10 09/22/10 12/22/10
O:$36 O:$37 O:$35 O:$31 N:$27 U:$28 U:$26 U:$22 N:$28 N:$30 N:$32
35
30
25
20
15
10
Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2
2009 2010 2011
03/14/11 03/23/11
O:$34 O:$35
Created by BlueMatrix
Rating and Price Target History for: G&K Services, Inc. (GKSR) as of 06-02-2011
08/13/08 10/07/08 10/29/08 12/18/08 04/29/09 06/01/09 08/07/09 09/23/09 10/28/09 01/27/10 04/28/10
N:$36 N:$32 N:$23 N:$21 N:$26 N:$22 N:$21 U:$21 N:$23 N:$26 N:$28
40
32
24
16
8
Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2
2009 2010 2011
06/15/10 08/18/10 11/02/10 01/19/11 02/02/11 05/03/11
N:$23 N:$24 N:$30 O:$37 O:$38 O:$40
Created by BlueMatrix
10
Robert W. Baird & Co.
11. Facility Services
June 3, 2011
Rating and Price Target History for: UniFirst Corporation (UNF) as of 06-02-2011
07/03/08 10/30/08 06/01/09 06/02/09 07/02/09 09/23/09 10/29/09 01/07/10 04/01/10 07/01/10 10/20/10
N:$53 O:$38 N:$37 N:$36 N:$39 U:$42 U:$43 O:$59 O:$60 O:$51 O:$54
60
50
40
30
20
10
Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2
2009 2010 2011
01/05/11 01/19/11 03/30/11
O:$57 N:$58 N:$60
Created by BlueMatrix
1 Robert W. Baird & Co. Incorporated makes a market in the securities of CTAS, GKSR and UNF .
Robert W. Baird & Co. Incorporated and/or its affiliates expect to receive or intend to seek investment banking
related compensation from the company or companies mentioned in this report within the next three months.
Investment Ratings: Outperform (O) - Expected to outperform on a total return, risk-adjusted basis the broader
U.S. equity market over the next 12 months. Neutral (N) - Expected to perform in line with the broader U.S. equity
market over the next 12 months. Underperform (U) - Expected to underperform on a total return, risk-adjusted
basis the broader U.S. equity market over the next 12 months.
Risk Ratings: L - Lower Risk - Higher-quality companies for investors seeking capital appreciation or income with
an emphasis on safety. Company characteristics may include: stable earnings, conservative balance sheets, and
an established history of revenue and earnings. A - Average Risk - Growth situations for investors seeking capital
appreciation with an emphasis on safety. Company characteristics may include: moderate volatility, modest
balance-sheet leverage, and stable patterns of revenue and earnings. H - Higher Risk - Higher-growth situations
appropriate for investors seeking capital appreciation with the acceptance of risk. Company characteristics may
include: higher balance-sheet leverage, dynamic business environments, and higher levels of earnings and price
volatility. S - Speculative Risk - High-growth situations appropriate only for investors willing to accept a high
degree of volatility and risk. Company characteristics may include: unpredictable earnings, small capitalization,
aggressive growth strategies, rapidly changing market dynamics, high leverage, extreme price volatility and
unknown competitive challenges.
Valuation, Ratings and Risks. The recommendation and price target contained within this report are based on a
time horizon of 12 months but there is no guarantee the objective will be achieved within the specified time horizon.
Price targets are determined by a subjective review of fundamental and/or quantitative factors of the issuer, its
industry, and the security type. A variety of methods may be used to determine the value of a security including,
but not limited to, discounted cash flow, earnings multiples, peer group comparisons, and sum of the parts. Overall
market risk, interest rate risk, and general economic risks impact all securities. Specific information regarding the
price target and recommendation is provided in the text of our most recent research report.
Distribution of Investment Ratings. As of May 31, 2011, Baird U.S. Equity Research covered 657 companies,
with 52% rated Outperform/Buy, 47% rated Neutral/Hold and 1% rated Underperform/Sell. Within these rating
categories, 12% of Outperform/Buy-rated, and 6% of Neutral/Hold-rated companies have compensated Baird for
investment banking services in the past 12 months and/or Baird managed or co-managed a public offering of
securities for these companies in the past 12 months.
Analyst Compensation. Analyst compensation is based on: 1) The correlation between the analyst's
recommendations and stock price performance; 2) Ratings and direct feedback from our investing clients, our
sales force and from independent rating services; and 3) The analyst's productivity, including the quality of the
analyst's research and the analyst's contribution to the growth and development of our overall research effort. This
compensation criteria and actual compensation is reviewed and approved on an annual basis by Baird's Research
Oversight Committee. Analyst compensation is derived from all revenue sources of the firm, including revenues
from investment banking. Baird does not compensate research analysts based on specific investment banking
transactions.A complete listing of all companies covered by Baird U.S. Equity Research and applicable research
disclosures can be accessed at
http://www.rwbaird.com/research-insights/research/coverage/research-disclosure.aspx .
11
Robert W. Baird & Co.
12. Facility Services
June 3, 2011
You can also call 1-800-792-2473 or write: Robert W. Baird & Co., Equity Research, 24th Floor, 777 E. Wisconsin
Avenue, Milwaukee, WI 53202.
Analyst Certification. The senior research analyst(s) certifies that the views expressed in this research report
and/or financial model accurately reflect such senior analyst's personal views about the subject securities or
issuers and that no part of his or her compensation was, is, or will be directly or indirectly related to the specific
recommendations or views contained in the research report.
Disclaimers
Baird prohibits analysts from owning stock in companies they cover.
This is not a complete analysis of every material fact regarding any company, industry or security. The opinions
expressed here reflect our judgment at this date and are subject to change. The information has been obtained
from sources we consider to be reliable, but we cannot guarantee the accuracy.
ADDITIONAL INFORMATION ON COMPANIES MENTIONED HEREIN IS AVAILABLE UPON REQUEST
The Dow Jones Industrial Average, S&P 500, S&P 400 and Russell 2000 are unmanaged common stock indices
used to measure and report performance of various sectors of the stock market; direct investment in indices is not
available.
Baird is exempt from the requirement to hold an Australian financial services license. Baird is regulated by the
United States Securities and Exchange Commission, FINRA, and various other self-regulatory organizations and
those laws and regulations may differ from Australian laws. This report has been prepared in accordance with the
laws and regulations governing United States broker-dealers and not Australian laws.
Copyright 2011 Robert W. Baird & Co. Incorporated
Other Disclosures
UK disclosure requirements for the purpose of distributing this research into the UK and other countries for which
Robert W. Baird Limited holds an ISD passport.
This report is for distribution into the United Kingdom only to persons who fall within Article 19 or Article 49(2) of
the Financial Services and Markets Act 2000 (financial promotion) order 2001 being persons who are investment
professionals and may not be distributed to private clients. Issued in the United Kingdom by Robert W. Baird
Limited, which has offices at Mint House 77 Mansell Street, London, E1 8AF and is a company authorized and
,
regulated by the Financial Services Authority. For the purposes of the Financial Services Authority requirements,
this investment research report is classified as objective.
Robert W. Baird Limited ("RWBL") is exempt from the requirement to hold an Australian financial services license.
RWBL is regulated by the Financial Services Authority ("FSA") under UK laws and those laws may differ from
Australian laws. This document has been prepared in accordance with FSA requirements and not Australian laws.
Ask the analyst a question Click here to unsubscribe
12
Robert W. Baird & Co.