Rentokil Initial (RTO) AI Stock Analysis

• Market Cap: £9.08B
• Dividend Yield: 2.05%
• Average Volume (3M): 6.22M
• Price to Earnings (P/E): 35.5
• Beta (1Y): 1.28
• Revenue Growth: -1.58%
• EPS Growth: -34.64%
• Country: UK
• Employees: 68,485
• Sector: Industrials
• Sector Strength: 78
• Industry: Specialty Business Services
• EPS (TTM): 0.09
• Shares Outstanding: 2,526,039,800
• 10 Day Avg. Volume: 6,893,623
• 30 Day Avg. Volume: 6,215,364
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: £420.43
• Price Target Upside: 15.73% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

• Rating: 66 Neutral
• Price Target: 390.00p ▲(7.35% Upside)

Rentokil Initial's overall stock score reflects strong financial performance with robust revenue growth and cost management, but is tempered by challenges in profitability and cash flow sustainability. Technical indicators suggest a neutral trend, while valuation metrics indicate the stock may be overvalued. The earnings call provided mixed signals, with international growth offset by North American challenges.

Positive Factors

International Business Performance

The international business is solid with 4.7% organic growth and a 19.3% adjusted operating margin.

Leadership

The appointment of two new Non-Executive Directors adds leadership experience in multi-site B2B and B2C companies, enhancing the Board's expertise.

Valuation

The shares look 'cheap' compared to history and other 'Quality' names in the sector and closest peer Rollins, at 18x 2025e P/E.

Negative Factors

Executive Turnover

There has been significant churn at the top of the organization, with key executives like the group CFO and CEO of North America leaving within the past year.

Integration Challenges

Uncertainties from the large integration of Terminix to manage alongside the group's plan to reinvigorate US organic growth cannot rule out further downside risk to estimates through 2025.

Lead Generation Issues

Management has noted that inbound customer leads have not improved, hindering organic growth recovery.

Rentokil Initial Business Overview & Revenue Model

Company Description

Rentokil Initial plc, together with its subsidiaries, provides route-based services in North America, the United Kingdom, rest of Europe, Asia, the Pacific, and internationally. It offers a range of pest control services for rodents, and flying and crawling insects, as well as other forms of wildlife management for commercial and residential customers. The company also provides hygiene services, including the provision and maintenance of products, such as soap and hand sanitizer dispensers, hand dryers, air care and purification, cubicle and surface sanitizers, feminine hygiene units, toilet paper dispensers, and floor protection mats. In addition, it engages in the supply and laundering of workwear, uniforms, cleanroom uniforms, and protective equipment. Further, the company installs and services interior and exterior plant displays, flowers, replica foliage, Christmas decorations, and ambient scenting for commercial businesses; offers property care services consisting of damp proofing, property conservation, and woodworm and wood rot treatment; and provides a range of specialist cleaning services, such as graffiti removal deep cleaning of kitchens and washrooms, trauma cleaning, and flood or fire damage cleaning, as well as specialist industrial cleaning and disinfection services, including the professional and discreet disinfection of areas that have been exposed to bio-hazardous situations, such as crime and trauma scenes, prison cells, void properties, emergency vehicles, and healthcare establishments. Additionally, it offers a range of healthcare waste management services comprising the collection, disposal, and recycling of hazardous and offensive waste produced by businesses and organizations associated with the provision of healthcare; and color-coded sharps disposal bins to deal with various types of waste. Rentokil Initial plc was founded in 1903 and is headquartered in Crawley, the United Kingdom.

How the Company Makes Money

Rentokil Initial generates revenue primarily through its pest control and hygiene services, which are offered on a contractual basis or as one-off service calls. The company's revenue model is driven by recurring service contracts, where customers pay for ongoing pest management and hygiene solutions, providing a stable and predictable income stream. Key revenue streams include residential pest control, commercial pest management, washroom hygiene services, and disinfection services, particularly following increased demand due to health and safety concerns. Additionally, Rentokil Initial benefits from strategic partnerships with businesses and organizations that require integrated pest management and hygiene solutions, further enhancing its earnings potential. The company also invests in technology and innovation to improve service efficiency and effectiveness, contributing to customer retention and growth in revenue.

Rentokil Initial Financial Statement Overview

Summary

Rentokil Initial shows robust revenue growth and strong gross profit margins, indicating effective cost management. However, the declining net profit margin and negative free cash flow growth are concerning, suggesting challenges in expense management and cash flow sustainability. The balance sheet is stable with moderate debt levels, supporting financial stability.

Income Statement

Rentokil Initial has demonstrated a consistent growth in revenue from 2019 to 2024, with a notable revenue growth rate of 1.13% from 2023 to 2024. The gross profit margin is impressive at 83.91% in 2024, indicating strong cost control. However, the net profit margin has declined to 5.65% in 2024, down from 7.09% in 2023, reflecting potential challenges in managing expenses or increased interest costs.

Balance Sheet

The balance sheet shows a stable equity base with stockholders' equity increasing to 4,229 million in 2024. The debt-to-equity ratio is 0.97, indicating a moderate level of leverage. The return on equity is 7.26%, reflecting a decent return for shareholders. The equity ratio remains healthy at 40.06%, suggesting financial stability.

Cash Flow

Operating cash flow has decreased slightly from 737 million in 2023 to 678 million in 2024, indicating some pressure on cash generation. The free cash flow to net income ratio stands at 1.51, suggesting good cash profitability. However, the free cash flow growth rate is negative at -11.99%, pointing to potential challenges in sustaining cash flow from operations or increased capital expenditures.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	5.44B	5.38B	3.71B	2.95B	2.79B
Gross Profit	4.56B	1.50B	977.00M	714.80M	653.00M
EBITDA	1.10B	1.16B	747.00M	676.80M	586.50M
Net Income	307.00M	381.00M	232.00M	263.00M	186.00M
Balance Sheet
Total Assets	10.55B	11.13B	11.92B	4.32B	5.84B
Cash, Cash Equivalents and Short-Term Investments	911.00M	1.56B	2.09B	597.90M	2.34B
Total Debt	4.11B	4.73B	5.40B	1.93B	3.40B
Total Liabilities	6.33B	7.04B	7.82B	3.06B	4.71B
Stockholders Equity	4.23B	4.09B	4.10B	1.26B	1.13B
Cash Flow
Free Cash Flow	463.00M	526.00M	410.00M	403.30M	391.70M
Operating Cash Flow	678.00M	737.00M	600.00M	563.20M	544.20M
Investing Cash Flow	-373.00M	-416.00M	-1.20B	-441.10M	-327.00M
Financing Cash Flow	-752.00M	-361.00M	1.32B	-417.10M	62.20M

Rentokil Initial Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 363.30
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:RTO, the sentiment is Neutral. The current price of 363.3 is below the 20-day moving average (MA) of 363.32, above the 50-day MA of 353.37, and below the 200-day MA of 363.71, indicating a neutral trend. The MACD of 3.92 indicates Positive momentum. The RSI at 52.06 is Neutral, neither overbought nor oversold. The STOCH value of 28.23 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GB:RTO.

Rentokil Initial Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ITRK	80 Outperform	£7.26B	20.64	29.71%	3.34%	1.14%	17.74%
SRP	77 Outperform	£2.31B	48.09	5.21%	1.33%	0.84%	-62.73%
JSG	76 Outperform	£556.51M	16.32	12.12%	2.83%	10.34%	33.59%
MTO	74 Outperform	£1.90B	17.75	23.48%	2.96%	14.34%	-16.43%
RST	67 Neutral	£358.74M	38.19	4.01%	2.00%	6.90%	―
RTO	66 Neutral	£9.08B	35.51	5.93%	2.05%	-1.58%	-34.64%
Sector *	60 Neutral	kr42.58B	13.50	1.95%	2.32%	-0.60%	-20.68%

Rentokil Initial Corporate Events

Rentokil Initial Reports Solid H1 2025 Performance and Strategic Progress

Rentokil Initial reported a solid performance for the first half of 2025, with a 3.1% increase in group revenue and a strong free cash flow conversion rate of 93%. The company is seeing positive results from its sales and marketing initiatives in North America, particularly in organic lead generation, and plans to continue its integration efforts to achieve cost reductions and improve operating margins. Despite some declines in operating profit and basic EPS, the company’s strategic focus on organic growth and integration is expected to align with market expectations for the year.

The most recent analyst rating on (GB:RTO) stock is a Buy with a £520.00 price target. To see the full list of analyst forecasts on Rentokil Initial stock, see the GB:RTO Stock Forecast page.

Rentokil Initial Announces Change in Major Holdings

Rentokil Initial PLC has announced a change in the nature of its holdings due to security lending, with GIC Private Limited now holding a 6.5% stake in the company. This adjustment in voting rights reflects a slight increase from previous holdings, indicating a strategic move by GIC to strengthen its influence within Rentokil Initial, potentially impacting the company’s governance and decision-making processes.

The most recent analyst rating on (GB:RTO) stock is a Buy with a £6.00 price target. To see the full list of analyst forecasts on Rentokil Initial stock, see the GB:RTO Stock Forecast page.

Rentokil Initial Announces Total Voting Rights Update

Rentokil Initial plc has announced that as of June 30, 2025, its issued share capital consists of 2,526,039,885 ordinary shares, each carrying one voting right. This update is crucial for shareholders to determine their interests in the company’s share capital under the FCA’s Disclosure Guidance and Transparency Rules.

The most recent analyst rating on (GB:RTO) stock is a Buy with a £6.40 price target. To see the full list of analyst forecasts on Rentokil Initial stock, see the GB:RTO Stock Forecast page.

Rentokil Initial Director Invests in Company Shares

Rentokil Initial plc announced that Sally Johnson, a Non-Executive Director, purchased 3,567 ordinary shares of the company at a price of £3.5085 per share on June 2, 2025. This transaction, conducted on the London Stock Exchange, reflects a personal investment by a key managerial figure, potentially signaling confidence in the company’s future performance.

The most recent analyst rating on (GB:RTO) stock is a Buy with a £6.40 price target. To see the full list of analyst forecasts on Rentokil Initial stock, see the GB:RTO Stock Forecast page.

Rentokil Initial to Sell France Workwear Business to H.I.G. Capital

Rentokil Initial plc has announced the intended sale of its France Workwear business to H.I.G. Capital for approximately €410 million, with completion expected in Q4 2025. This move allows Rentokil Initial to streamline its operations, focusing more on its core pest control and hygiene & wellbeing sectors, enhancing capital efficiency, and improving cash flow. The transaction aligns with the company’s strategy to concentrate on high-growth markets and reduce capital expenditure, while the proceeds will be used for corporate purposes including deleveraging and investment in growth opportunities.

The most recent analyst rating on (GB:RTO) stock is a Buy with a £6.40 price target. To see the full list of analyst forecasts on Rentokil Initial stock, see the GB:RTO Stock Forecast page.

Rentokil Initial CEO Increases Stake through Dividend Reinvestment

Rentokil Initial plc announced that its CEO, Andy Ransom, acquired 17,753 ordinary shares through the company’s Dividend Reinvestment Plan, with each share priced at £3.4706. This transaction, conducted on the London Stock Exchange, reflects a significant investment by a key executive, potentially indicating confidence in the company’s future performance and stability.

The most recent analyst rating on (GB:RTO) stock is a Buy with a £6.40 price target. To see the full list of analyst forecasts on Rentokil Initial stock, see the GB:RTO Stock Forecast page.