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Rollins Inc ROL

Morningstar Rating
$42.58 +0.75 (1.79%)
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Company Report

Rollins Earnings: Softened Organic Growth of Late 2023 Disappoints Investors; Shares Still Expensive

Wide-moat Rollins' performance in the fourth quarter of 2023 remained robust, rounding out a third consecutive year of strong execution and pleasing earnings growth. Organic sales growth softened a touch to about 7%, down from 8.4% in the prior quarter, thereby falling short of our expectations for late 2023, with our full-year organic growth forecast of 8.6% implying similar fourth-quarter organic top-line growth to that of the first nine months of year. Still, full-year 2023 sales of $3.1 billion tracked modestly ahead of our forecast owing to a stronger-than-expected contribution from bolt-on acquisitions in late 2023. Rollins' fourth-quarter operating profit margin also underwhelmed us, leading full-year 2023 EBIT of $604 million to modestly trail our forecast.

Price vs Fair Value

ROL is trading at a 25% premium.
Price
$42.58
Fair Value
$39.00
Uncertainty
Medium
1-Star Price
$12.70
5-Star Price
$12.60
Economic Moat
Whwf
Capital Allocation
Vpmjnxn

Bulls Say, Bears Say

Bulls

The recent uptick in capital allocated to tuck-in acquisitions is likely to continue, supporting economies of scale and boosting operating margin.

Bears

Competition is heating up for pest control M&A, putting upward pressure on deal multiples.

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

Trading Information

Previous Close Price
$41.83
Day Range
$41.6442.62
52-Week Range
$32.1945.04
Bid/Ask
$42.28 / $42.76
Market Cap
$20.60 Bil
Volume/Avg
1.4 Mil / 2.0 Mil

Key Statistics

Price/Earnings (Normalized)
51.46
Price/Sales
7.06
Dividend Yield (Trailing)
1.32%
Dividend Yield (Forward)
1.41%
Total Yield
2.84%

Company Profile

Rollins is a global leader in route-based pest-control services, with operations spanning North, Central and South America, Europe, the Middle East and Africa and Australia. Its portfolio of pest-control brands includes the prominent Orkin brand, market leader in the U.S., where it boasts near national coverage, and in Canada. Residential pest and termite prevention dominates the services provided by Rollins, owing to the group’s ongoing focus on U.S. and Canadian markets.
Sector
Consumer Cyclical
Industry
Personal Services
Stock Style Box
Mid Growth
Total Number of Employees
19,031

Competitors

Valuation

Metric
ROL
ECL
CTAS
Price/Earnings (Normalized)
51.4644.0144.46
Price/Book Value
18.547.6915.54
Price/Sales
7.064.066.89
Price/Cash Flow
40.5627.9832.35
Price/Earnings
ROL
ECL
CTAS

Financial Strength

Metric
ROL
ECL
CTAS
Quick Ratio
0.550.911.00
Current Ratio
0.711.302.24
Interest Coverage
31.775.8818.14
Quick Ratio
ROL
ECL
CTAS

Profitability

Metric
ROL
ECL
CTAS
Return on Assets (Normalized)
18.15%6.92%17.62%
Return on Equity (Normalized)
35.67%19.65%39.86%
Return on Invested Capital (Normalized)
24.69%10.39%24.03%
Return on Assets
ROL
ECL
CTAS
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