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Rentokil Initial PLC ADR RTO

Morningstar Rating
$27.35 −1.51 (5.23%)
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Company Report

Softened Economic Outlook Likely to Prove a Transitory Headwind to Pest Control Organic Growth

Rentokil Initial's strategy is sharply focused on the attainment and maintenance of market share leadership in the highly localised pest-control and hygiene-service markets it competes in. The strategy aims to benefit from ever-improving unit costs offered by economies of density in each localised geography in which Rentokil Initial operates via organic growth and a strong acquisition impetus aimed at rolling up the pest-control and hygiene-service markets, which remain substantially fragmented. To this end, Rentokil Initial has completed over 200 acquisitions since 2015—and has spent an average of GBP 310 million on mergers and acquisitions annually over 2018-22—focusing on acquisition targets that build geographic density of its customers. Further, the late 2022 acquisition of Terminix Global Holdings is a transformative and moat-reinforcing deal, creating a new U.S. market share leader. Pest-control targets remain Rentokil's top M&A priority, but tuck-in candidates for the hygiene segment are now also set to become a focus. The successful execution of the strategy has delivered a durable cost advantage for the pest-control business—the source of our wide economic moat rating for Rentokil Initial.

Price vs Fair Value

RTO is trading at a 24% discount.
Price
$27.35
Fair Value
$59.00
Uncertainty
Medium
1-Star Price
$23.40
5-Star Price
$23.50
Economic Moat
Lqw
Capital Allocation
Qhwhkqnz

Bulls Say, Bears Say

Bulls

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

Bears

Presently heightened health awareness may not yield permanently higher growth for the hygiene business.

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News

Trading Information

Previous Close Price
$28.86
Day Range
$27.2827.99
52-Week Range
$23.3941.55
Bid/Ask
$27.03 / $27.60
Market Cap
$13.80 Bil
Volume/Avg
1.6 Mil / 694,323

Key Statistics

Price/Earnings (Normalized)
20.45
Price/Sales
2.22
Dividend Yield (Trailing)
1.80%
Dividend Yield (Forward)
1.80%
Total Yield
1.80%

Company Profile

Rentokil Initial is a leading 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
48,592

Competitors

Valuation

Metric
RTO
ECL
CTAS
Price/Earnings (Normalized)
20.4543.3645.68
Price/Book Value
2.768.0215.97
Price/Sales
2.224.227.08
Price/Cash Flow
15.0028.7833.24
Price/Earnings
RTO
ECL
CTAS

Financial Strength

Metric
RTO
ECL
CTAS
Quick Ratio
1.030.911.00
Current Ratio
1.131.302.24
Interest Coverage
3.485.8818.14
Quick Ratio
RTO
ECL
CTAS

Profitability

Metric
RTO
ECL
CTAS
Return on Assets (Normalized)
4.19%6.92%17.62%
Return on Equity (Normalized)
13.00%19.65%39.86%
Return on Invested Capital (Normalized)
6.61%10.39%24.03%
Return on Assets
RTO
ECL
CTAS
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