Shares of Cintas Corp. fell Wednesday after the uniform maker said its quarterly profit slid amid high unemployment, and CEO Scott Farmer warned analysts' expectations for fiscal 2010 were "too optimistic."
Cintas stock fell $3.33, or 11.2 percent, to $26.35 in morning trading. The stock has ranged from $18.09 to $30.85 over the past year.
On Tuesday, Cintas said it earned $57 million, or 37 cents per share in the quarter ended Nov. 30, down from $71 million, or 47 cents per share, in the year-ago quarter. Revenue dropped 10 percent to $884 million.
Both results missed the estimates of analysts surveyed by Thomson Reuters.
For Cintas' 2010 fiscal year ending in May, analysts, on average, predict income of $1.75 per share on revenue of $3.58 billion.
Cintas is directly affected by the staffing levels of its customers. The unemployment rate in November was 10 percent. The Federal Reserve has said it expects the jobless rate to remain above 8 percent through 2011.
The company is likely to post revenue declines in uniform rentals for the next several quarters, according to Baird analyst Andrea Wirth. She added the company's fiscal third quarter will likely be "particularly challenging" as corporations' holiday shutdowns run longer than they have in previous years.
Additionally, Wirth said that Cintas' management was still concerned that rental prices could drop further. In a note to investors Wednesday, she said the company was "unable to express confidence" that pre-recession prices could be reestablished even when demand for uniforms recovers.
Wirth reiterated her "Underperform" rating, cut her earnings estimates through the 2011 fiscal year and reduced her share price target by $2 to $26.