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Rollins Inc ROL Stock Quote

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Morningstar‘s Stock Analysis ROL

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Investors Pile Into Recession-Resistant Rollins Amid an Uncertain Macro Outlook; Shares Expensive

Grant Slade, CFA Senior Equity Analyst

Analyst Note

| Grant Slade, CFA |

Wide-moat Rollins continues to please investors in late 2022, with the performance of its U.S. pest control franchise defying heady inflationary pressures and slowing economic activity. Strong organic sales supported third-quarter revenue growth of 12.2%, tracking in line with our full-year expectations. Further, operating profit margin has, as we’d anticipated, remained impervious to cost base pressures in late 2022 as the robust price increase put in place during late spring offset inflation in fuel, labor, and material and supplies expenses. Consequently, Rollins’ third-quarter EBITDA margin of 23.3% was largely flat year on year but is importantly 3.4% higher than its first-quarter 2022 showing that was significantly impacted by inflationary headwinds. We’ve nudged our full-year 2022 EBIT and EPS estimates up by about 3% and 4% to $498 million and $0.75, respectively, with operating leverage benefiting group EBIT margin slightly more than we’d previously credited. But the impact is relatively immaterial; along with a time value of money adjustment, we lift our fair value estimate by 1% to $28 per share.

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Key Statistics ROL

Company Profile ROL

Business Description

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 predominate the services provided by Rollins, owing to the group’s ongoing focus on U.S. and Canadian markets.

2170 Piedmont Road, N.E.
Atlanta, GA, 30324
T +1 404 888-2000
Industry Personal Services
Most Recent Earnings Sep 30, 2022
Fiscal Year End Dec 31, 2022
Employees 16,482