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Rentokil Initial PLC RTO

Morningstar Rating
GBX 448.10 −9.40 (2.05%)
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Company Report

Rentokil: Activist Stake Indicative of Latent Shareholder Value; Shares Still Appeal

Shares in Rentokil Initial remain appealing despite the pronounced stock price response to news that activist investor Nelson Peltz has acquired a significant stake in the wide-moat pest control name. Peltz’s investment firm, Trian Partners, disclosed that it is now one of Rentokil’s top 10 shareholders, sending shares some 12% higher in early trade on June 12. We think Peltz’s investment underscores the extent to which investors remain overly pessimistic regarding Rentokil’s longer-term prospects, having overreacted to the business’ recent underperformance. We continue to see upside, with the stock still trading at a 25% discount to our unchanged GBX 620/USD 39.50 fair value estimate.

Price vs Fair Value

RTO is trading at a 397% premium.
Price
GBX 448.10
Fair Value
GBX 892.00
Uncertainty
Medium
1-Star Price
GBX 174.00
5-Star Price
GBX 287.00
Economic Moat
Zxbyp
Capital Allocation
Yhjrkyxxl

Bulls Say, Bears Say

Bulls

Rentokil is well positioned to benefit from fast-growing Asian pest-control markets.

Bears

Currently, heightened hygiene awareness may not yield permanently higher growth for the health and wellness business.

Is it the right time to buy, sell, or hold?
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News

Trading Information

Previous Close Price
GBX 457.50
Day Range
GBX 447.60458.90
52-Week Range
GBX 387.80663.80
Bid/Ask
GBX 0.00 / GBX 480.00
Market Cap
GBX 1.13 Tril
Volume/Avg
5.8 Mil / 8.5 Mil

Key Statistics

Price/Earnings (Normalized)
21.67
Price/Sales
2.11
Dividend Yield (Trailing)
1.94%
Dividend Yield (Forward)
1.94%
Total Yield
1.94%

Company Profile

Rentokil Initial is the largest global provider of route-based pest-control and commercial hygiene services, operating in 83 countries. The group also offers a range of specialist route-based services including office and commercial space plant care, property care, and workwear rentals. The group has a diverse client base that includes global food producers, hotel chains, industrial goods businesses, restaurants, and individual residential customers.
Sector
Industrials
Industry
Specialty Business Services
Stock Style Box
Mid Growth
Total Number of Employees
63,551

Competitors

Valuation

Metric
RTO
CTAS
ECL
Price/Earnings (Normalized)
21.6752.3942.89
Price/Book Value
2.7517.798.46
Price/Sales
2.118.174.50
Price/Cash Flow
13.1737.3028.90
Price/Earnings
RTO
CTAS
ECL

Financial Strength

Metric
RTO
CTAS
ECL
Quick Ratio
0.951.090.93
Current Ratio
1.052.381.41
Interest Coverage
3.4819.446.11
Quick Ratio
RTO
CTAS
ECL

Profitability

Metric
RTO
CTAS
ECL
Return on Assets (Normalized)
5.14%18.30%7.56%
Return on Equity (Normalized)
14.43%40.22%20.92%
Return on Invested Capital (Normalized)
7.92%24.89%11.24%
Return on Assets
RTO
CTAS
ECL
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