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Cintas Corporation (CTAS)
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GDI Integrated Facility Services Inc. Subordinate Voting Shares (GDI)
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ABM Industries Incorporated (ABM)
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Boyd Group Services Inc. (BYD)
Q: Your thoughts on GDI please. Continue to hold?
5i Research Answer:
GDI is a small name ($794M market cap), it trades at a slightly high valuation of 25X forward earnings, but its fundamentals are mostly strong (good sales growth, profitable with good free cash flows), but margins have been falling. Its equity balance continues to expand, but debt levels are also creeping up (3.2X net debt/EBITDA). Momentum has been weak, and along with its margins, valuation is contracting to reflect the weakening fundamentals. We would like to see its next earnings before making a better assessment, but overall we would be comfortable holding it, but for near-term better setup, we might prefer BYD (different industry), ABM, CTAS.