Rentokil Initial (RTO) AI Stock Analysis

• Market Cap: £8.98B
• Dividend Yield: 1.67%
• Average Volume (3M): 6.31M
• Price to Earnings (P/E): 29.4
• Beta (1Y): 1.24
• Revenue Growth: 1.13%
• EPS Growth: -19.48%
• Country: UK
• Employees: 68,485
• Sector: Industrials
• Sector Strength: 90
• Industry: Specialty Business Services
• EPS (TTM): 0.09
• Shares Outstanding: 2,524,539,800
• 10 Day Avg. Volume: 5,407,272
• 30 Day Avg. Volume: 6,305,188
• PEG Ratio: -3.07
• Price to Book (P/B): 2.48
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 24.81
• 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: £412.22
• Price Target Upside: 17.58% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 9

• Rating: 66 Neutral
• Price Target: 390.00p ▲(11.24%Upside)

Rentokil Initial is bolstered by strong financial performance and strategic corporate events, suggesting confidence and alignment with long-term growth strategies. However, valuation concerns and challenges in North American operations present risks. Continued focus on growth and operational improvements could enhance future prospects.

Positive Factors

International Business

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

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.

Leadership Changes

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.

Organic Growth Challenges

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. The pest control segment provides solutions for the prevention and control of pests, including rodents, insects, and other wildlife, to commercial and residential customers. This segment is a major revenue driver, with recurring service contracts ensuring a steady income stream. The hygiene services division offers washroom and hygiene solutions, such as hand sanitizers, air fresheners, and sanitary waste disposal services. This division also operates on a contract basis, providing consistent revenue. Additionally, the company offers workwear services, supplying and laundering uniforms and protective clothing for various industries. Rentokil Initial's earnings are further bolstered by strategic acquisitions and partnerships, which expand its market reach and service capabilities, enhancing its competitive edge in delivering essential services globally.

Rentokil Initial Financial Statement Overview

Summary

Rentokil Initial demonstrates strong revenue growth and effective cost management, as evidenced by high gross profit margins. However, the declining net profit margin and negative free cash flow growth indicate potential challenges in expense management and cash flow sustainability. The balance sheet remains healthy with a moderate debt level and good equity ratio, 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
	EBIT
549.00M	766.00M	317.00M	346.50M	293.80M
	EBITDA
1.10B	1.16B	747.00M	676.80M	586.50M
	Net Income Common Stockholders
307.00M	381.00M	232.00M	263.00M	186.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
911.00M	1.56B	2.09B	597.90M	2.34B
	Total Assets
10.55B	11.13B	11.92B	4.32B	5.84B
	Total Debt
4.11B	4.73B	5.40B	1.93B	3.40B
	Net Debt
3.20B	3.17B	3.31B	1.34B	1.23B
	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: Negative
• Last Price: 350.60
• 50DMA: Positive
• 100DMA: Negative
• 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 Negative. The current price of 350.6 is below the 20-day moving average (MA) of 352.39, above the 50-day MA of 345.57, and below the 200-day MA of 373.50, indicating a neutral trend. The MACD of 1.41 indicates Positive momentum. The RSI at 49.53 is Neutral, neither overbought nor oversold. The STOCH value of 32.12 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GB:RTO.

Rentokil Initial Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
JSG	79 Outperform	£599.39M	17.11	12.12%	3.67%	10.34%	33.59%
ITRK	78 Outperform	£7.62B	22.51	25.35%	4.25%	1.94%	16.26%
MTO	77 Outperform	£1.75B	17.48	23.48%	1.81%	15.25%	25.57%
SRP	72 Outperform	£1.96B	46.47	4.71%	2.91%	-0.68%	-78.93%
RST	68 Neutral	£347.10M	27.74	5.32%	0.79%	-0.65%	―
RTO	66 Neutral	£8.98B	29.35	7.38%	1.67%	1.13%	-19.48%
Sector *	66 Neutral	$4.52B	12.34	5.41%	3.62%	4.15%	-12.18%

Rentokil Initial Corporate Events

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.

Rentokil Initial AGM 2025: Resolutions Passed Amid Shareholder Engagement

Rentokil Initial PLC held its Annual General Meeting (AGM) on May 7, 2025, where all proposed resolutions were passed. Notably, the re-election of Richard Solomons as a director saw over 20% opposition, prompting the board to engage further with shareholders. The successful passing of resolutions, including those related to director appointments and financial matters, reflects the company’s ongoing commitment to governance and shareholder engagement.

Rentokil Initial Strengthens Board with New Non-Executive Directors

Rentokil Initial has announced the appointment of two new Non-Executive Directors, Leanne Sheraton and Sam Mitchell, effective June 1, 2025. These appointments aim to enhance the company’s board with extensive experience in marketing, brand development, and leadership in North American multi-site businesses. The changes are expected to support Rentokil Initial’s strategic plans, particularly in North America, as the company continues to focus on growth and customer acquisition. Additionally, two current Non-Executive Directors, Linda Yueh and Sarosh Mistry, will be stepping down from the board.

Rentokil Initial CEO Andy Ransom to Retire by 2026

Rentokil Initial plc announced the upcoming retirement of its Chief Executive, Andy Ransom, by the 2026 AGM. Ransom, who has served as CEO for 12 years, has been pivotal in establishing the company as a global leader in pest control. The board, led by Chair Richard Solomons, has initiated the search for a successor. The company is currently prioritizing the turnaround of its underperforming North American business, while maintaining its focus on global market expansion. Ransom will continue to lead these efforts until a new CEO is appointed.

Rentokil Initial Issues $1.25 Billion in Notes to Enhance Financial Flexibility

Rentokil Initial has announced the issuance of $750 million in 5.000% Notes due 2030 and $500 million in 5.625% Notes due 2035 through its subsidiary, Rentokil Terminix Funding, LLC. The proceeds will be used to repay a term loan maturing in October 2025 and for general corporate purposes, enhancing the company’s financial flexibility and potentially strengthening its market position.

Rentokil Initial PLC Announces Change in Shareholding Structure

Rentokil Initial PLC has announced a change in the nature of its holdings due to security lending, with GIC Private Limited crossing a threshold of 6.341478% in voting rights. This adjustment reflects a strategic maneuver in the company’s shareholding structure, potentially impacting its market dynamics and stakeholder interests.

Rentokil Initial Reports Modest Q1 Growth Amid Strategic Expansion

Rentokil Initial PLC reported a modest revenue growth of 1.5% in the first quarter of 2025, with organic revenue growth at 1.8%. Despite challenges in North America due to subdued lead flow, the company remains optimistic about long-term growth, supported by its global reach and diverse customer base. The company is enhancing its growth initiatives through digital lead generation and expanding its satellite branches, while also launching a door-to-door sales program. Internationally, the company saw stronger growth, particularly in Europe, Asia, and the Pacific regions.

Rentokil Initial Sees Change in Major Shareholdings

Rentokil Initial PLC has been notified of a change in major shareholdings by Independent Franchise Partners, LLP, which now holds 5% of the voting rights in the company. This acquisition of voting rights may influence Rentokil Initial’s shareholder dynamics and potentially impact its strategic decisions, reflecting the ongoing interest and investment in the company’s operations.

Rentokil Initial Announces Significant Share Purchase by Associated Trust

Rentokil Initial plc announced a transaction involving the purchase of 1,750 American Depositary Shares by the Trustees of the David John Frear Revocable Trust, a person closely associated with David Frear, a Non-Executive Director. This transaction, conducted on the New York Stock Exchange, underscores the trust’s confidence in the company’s market position and potential growth, reflecting positively on Rentokil Initial’s operational outlook.