Cintas Corporation (CTAS), a uniform rental and cleaning supply company, released its second quarter earnings on Thursday, December 19. Despite the company reporting increased revenue, its stock fell by more than 9% following the report.

Revenue for the second quarter reached $2.56 billion, up 7.8% from revenue of $2.38 billion reported during the same quarter last year. This was in line with analysts’ expectations.

“Cintas delivered strong results in the second quarter, with robust year-over-year revenue and earnings growth, excellent margin expansion and strong cash generation,” said Cintas’ CEO, Todd Schneider. “Our results reflect the exceptional execution of our employee-partners and the comprehensive value proposition we provide to our customers in supporting their image, safety, cleanliness and compliance needs. We believe that Cintas’ differentiated culture, superior products and services and industry-best talent continue to position us to deliver meaningful value creation in fiscal 2025 and beyond.”

Cintas reported quarterly net income of $448.5 million or $1.09 per diluted share. This was up from $374.6 million or $0.90 per diluted share during the same quarter last year.

The company’s uniform rental and facility services segment grew 7.6% year-over-year, reaching $1.99 billion. The first aid and safety services segment reported $299.4 million in revenue. Operating income came in at $591.4 million, an increase of 18.4% compared to last year’s second quarter. Throughout the quarter, Cintas paid dividends totaling $158.0 million to shareholders, an increase of 14.9% compared to last year. The company updated its full fiscal year guidance and expects annual revenue to be between $10.26 to $10.32 billion.

Cintas (CTAS) shares closed at $185.85, up 2% for the week.

Lamb Weston Reports Quarterly Results

Lamb Weston Holdings, Inc. (LW) announced its second quarter earnings on Thursday, December 19. The Idaho-based company reported lower-than-expected earnings, causing its shares to drop by almost 17% following the report.

The company reported revenue of $1.60 billion during the second quarter. This was down 8% from revenue of $1.73 billion in the same quarter last year and below analysts’ estimates of $1.67 billion.

“Our financial results in the second quarter were below our expectations,” said Lamb Weston CEO, Tom Werner. “In terms of the broader operating environment, we expect challenging conditions to persist through the remainder of fiscal 2025 and into fiscal 2026, driven primarily by an accelerating rate of capacity additions and continued near-term softening of global frozen potato demand below historical rates, particularly outside North America, until demand trends improve and capacity expansion normalizes. We are executing with urgency and discipline to make lasting improvements to our operations as we weather what we believe are transitory challenges, and we remain focused on leveraging our solid fundamentals and balance sheet to deliver value to shareholders.”

For the quarter, Lamb Weston reported a net loss of $36.1 million or $0.25 per adjusted share. This is a decrease from net income of $215.0 million or $1.48 per adjusted share at the same time last year.

The frozen food supplier reported a decrease in net sales for its North American segment which decreased 8% to $1.07 billion. The company’s International segment reported net sales of $528.8 million, down 6% from the $565.0 million reported at the same time last year. For fiscal 2025, the company reduced its net sales target to be in the range of $6.35 billion to $6.45 billion. The company highlighted a restructuring plan aimed at driving operational and cost efficiencies and improving cash flows. This plan includes the permanent closure of a manufacturing facility, temporarily curtailing production, reducing staff, decreasing operating costs and monitoring capital spending.

Lamb Weston Holdings, Inc. (LW) shares ended the week at $65.53, down 1% for the week.

Conagra Brands Announces Earnings

Conagra Brands, Inc. (CAG) announced its second quarter earnings on Thursday, December 19. The Chicago-based company reported a decline in sales and earnings. The company’s stock declined by 2% after the release of the report.

The company reported revenue of $3.20 billion during the second quarter. This was a decrease from revenue of $3.21 billion in the same quarter last year, but surpassed analysts’ estimates of $3.14 billion.

“Our business returned to growth in the second quarter despite a continued challenging consumer environment as our investments paid off, driving strong market share performance,” said Conagra CEO, Sean Connolly. “While momentum remains strong, we expect the business to be impacted by two headwinds in the back half including higher than expected inflation and unfavorable foreign exchange rates, leading us to update our fiscal 2025 outlook.”

For the quarter, Conagra reported adjusted net income of $284.5 million or $0.59 per diluted share. This is a slight decline from net income of $286.2 million or $0.60 per diluted share at the same time last year.

The packaged foods company, which holds popular brands such as Duncan Hines, Healthy Choice and Slim Jim, reported organic net sales decreased 0.3% due to a negative impact from price/mix and a slight increase in volume. The company’s Grocery and Snacks segment accounted for $1.3 billion in net sales, a 2% increase during the quarter. Conagra’s Refrigerated and Frozen segment was relatively unchanged at $1.3 billion compared to the sales reported a year ago. Foodservice decreased by almost 1% to $292 million. The company revised its fiscal 2024 outlook and expects adjusted earnings per share to be between $2.45 to $2.50.

Conagra Brands, Inc. (CAG) shares ended the week at $27.65, relatively unchanged for the week.

The Dow started the week at 42,864 and closed at 42,732 on 1/3. The S&P 500 started the week at 5,921 and closed at 5,942. The NASDAQ started the week at 19,460 and closed at 19,622.

U.S. Treasury yields fluctuated early in the holiday week as investors waited for the release of the latest economic data for the manufacturing sector. Yields traded lower towards the end of the week as the number of applications for unemployment benefits dropped to the lowest level in the last eight months.

On Friday, the Institute for Supply Management (ISM) released its purchasing managers’ index (PMI) for December, which measures the change in production levels across the U.S. and is used as an indicator of U.S. economic activity. The PMI for December was 49.3%, up from a PMI of 48.4% in November and above analysts’ forecast of 48.4%. A manufacturing PMI above 42.5% typically evidences an expansion in the overall economy.

“The overall economy continued in expansion for the 56th month after one month of contraction in April 2020,” said Chair of the ISM’s Manufacturing Business Committee, Timothy R. Fiore. “U.S. manufacturing activity contracted again in December, but at a slower rate compared to November. Demand showed signs of improving, while output stabilized and inputs stayed accommodative.”

The benchmark 10-year Treasury note yield opened the week of December 30 at 4.63% and traded as high as 4.60% on Thursday. The 30-year Treasury bond opened the week at 4.82% and traded as high as 4.82% on Thursday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment decreased by 9,000 to 211,000 for the week ended December 28. Continuing unemployment claims dropped by 52,000 to 1.84 million.

“Businesses hired fewer employees in 2024 than they did in 2023 and 2022, leading to the persistent increase in continuing claims in 2024,” said senior economic advisor at PNC Financial, Stuart Hoffman. “But the economy is still creating roughly enough jobs to keep up with labor force growth.”

The 10-year Treasury note yield finished the week of 12/30 at 4.60%, while the 30-year Treasury note yield finished the week at 4.81%.

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, January 2. The survey showed mortgage rates have climbed to their highest levels since July.

This week, the 30-year fixed rate mortgage averaged 6.91%, up from last week’s average of 6.85%. Last year at this time, the 30-year fixed rate mortgage averaged 6.62%.

The 15-year fixed rate mortgage averaged 6.13% this week, up from last week’s 6.00%. During the same week last year, the 15-year fixed rate mortgage averaged 5.89%.

“Inching up to just shy of 7%, mortgage rates reached their highest point in nearly six months,” said Freddie Mac’s Chief Economist, Sam Khater. “Compared to this time last year, rates are elevated and the market’s affordability headwinds persist. However, buyers appear to be more inclined to get off the sidelines as pending home sales rise.”

Based on published national averages, the savings rate was 0.42% as of 12/16. The one-year CD averaged 1.83%.

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