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Rollins (ROL)
NYSE:ROL
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Rollins
(NYSE:ROL)
78Outperform
Positive Factors
Acquisition Strategy
Rollins announced the acquisition of Saela Pest Control, which is one of the largest door-to-door pest control companies in the country.
Market Share
Rollins increased its market share to 24% in North America, indicating some advantage over Rentokil's integration challenges.
Revenue Growth
Saela will be accretive to organic revenue growth, margins, and earnings, and ROIC is expected to exceed Rollins’ cost.
Negative Factors
Consumer Demand
Investors have been concerned that softness in ROL's Residential segment represents weak consumer demand, attributed to volatility in one-time business and new system implementations.
Financial Performance
Mixed Q4 results with better sales, weaker EBITDA, and in-line EPS relative to consensus.
Margin Targets
The targeted 30% incremental margins did not come close in Q4.
Rollins (ROL) vs. S&P 500 (SPY)
Market Cap
$27.12B
Dividend Yield1.21%
Average Volume (3M)1.94M
Price to Earnings (P/E)58.0
Beta (1Y)0.53
Revenue Growth10.26%
EPS Growth8.47%
CountryUS
Employees20,265
SectorConsumer Cyclical
Sector Strength61
IndustryPersonal Products & Services
Share Statistics
EPS (TTM)0.96
Shares Outstanding485,075,620
10 Day Avg. Volume2,211,805
30 Day Avg. Volume1,938,854
Financial Highlights & Ratios
PEG Ratio6.85
Price to Book (P/B)N/A
Price to Sales (P/S)7.38
Price to Cash Flow (P/CF)33.20
P/FCF Ratio33.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$53.67Price Target Upside2.80% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
Rollins Business Overview & Revenue Model
Company DescriptionRollins, Inc., through its subsidiaries, provides pest and wildlife control services to residential and commercial customers in the United States and internationally. The company offers pest control services to residential properties protecting from common pests, including rodents, insects, and wildlife. It also provides workplace pest control solutions for customers across various end markets, such as healthcare, foodservice, and logistics. In addition, the company offers traditional and baiting termite protection, as well as ancillary services. It serves clients directly, as well as through franchisee operations. Rollins, Inc. was incorporated in 1948 and is headquartered in Atlanta, Georgia.
How the Company Makes MoneyRollins primarily generates revenue through the provision of pest control services. The company's revenue model is based on service fees charged to both residential and commercial customers for pest management solutions. These services are often provided on a contractual basis, offering recurring revenue streams. The company benefits from a diversified customer base and a broad geographic footprint, reducing reliance on any single market. Rollins also leverages strategic acquisitions to expand its market presence and enhance service offerings. Additionally, Rollins maintains partnerships with various property management firms and other businesses to offer bundled services, further contributing to its revenue.
Rollins Financial Statement Overview
Summary
Rollins displays robust financial health with strong revenue growth, profitability, and cash flow generation. The balance sheet shows moderate leverage with a high return on equity, suggesting efficient capital use. Overall, the company is well-positioned for future growth.Income Statement
Rollins shows strong financial performance with consistent revenue and profit growth. The TTM data reveals a Gross Profit Margin of 63.0% and a Net Profit Margin of 13.8%. The company has achieved a notable Revenue Growth Rate of 10.3% compared to the previous year. EBIT and EBITDA margins are healthy at 19.5% and 22.7% respectively, indicating efficient cost management and operational profitability.85
Very Positive
Balance Sheet
Rollins maintains a solid balance sheet with a Debt-to-Equity Ratio of 0.61, showing moderate leverage. The Return on Equity (ROE) is impressive at 35.1%, reflecting high profitability relative to shareholder investments. The Equity Ratio stands at 47.2%, indicating a balanced capital structure with substantial equity backing.75
Positive
Cash Flow
The company exhibits strong cash flow generation with a Free Cash Flow Growth Rate of 17.0%. The Operating Cash Flow to Net Income Ratio is 1.30, and the Free Cash Flow to Net Income Ratio is 1.24, demonstrating effective conversion of net income into cash flow, which supports ongoing operations and growth initiatives.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 3.39B | 3.07B | 2.70B | 2.42B | 2.16B | Gross Profit |
| 3.39B | 1.60B | 1.39B | 1.26B | 1.11B | EBIT |
| 657.22M | 583.23M | 493.39M | 439.99M | 361.40M | EBITDA |
| 771.13M | 705.06M | 584.71M | 534.19M | 449.73M | Net Income Common Stockholders |
| 466.38M | 434.96M | 368.60M | 356.56M | 266.76M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 89.63M | 103.83M | 95.35M | 105.30M | 98.48M | Total Assets |
| 2.82B | 2.60B | 2.12B | 1.98B | 1.85B | Total Debt |
| 812.53M | 816.35M | 336.33M | 402.76M | 417.14M | Net Debt |
| 722.90M | 712.52M | 240.98M | 297.46M | 318.67M | Total Liabilities |
| 1.49B | 1.44B | 854.83M | 897.38M | 904.54M | Stockholders Equity |
| 1.33B | 1.16B | 1.27B | 1.08B | 941.36M |
| Cash Flow | Free Cash Flow | |||
| 580.08M | 495.90M | 435.30M | 374.61M | 412.56M | Operating Cash Flow |
| 607.65M | 528.37M | 465.93M | 401.81M | 435.79M | Investing Cash Flow |
| -176.23M | -372.89M | -134.14M | -98.97M | -162.40M | Financing Cash Flow |
| -440.71M | -149.42M | -336.02M | -290.16M | -281.27M |
Rollins Technical Analysis
Neutral
52.21
Price Trends
51.35
Positive
49.85
Positive
49.36
Positive
Market Momentum
0.78
Negative
67.94
Neutral
86.31
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ROL, the sentiment is Neutral. The current price of 52.21 is below the 20-day moving average (MA) of 52.59, above the 50-day MA of 51.35, and above the 200-day MA of 49.36, indicating a neutral trend. The MACD of 0.78 indicates Negative momentum. The RSI at 67.94 is Neutral, neither overbought nor oversold. The STOCH value of 86.31 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ROL.
Rollins Risk Analysis
Rollins disclosed 19 risk factors in its most recent earnings report. Rollins reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Rollins Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Performance Comparison
ROL
Rollins
52.21
7.71
17.33%
FTDR
frontdoor
37.96
7.03
22.73%
EJH
E-Home Household Service Holdings
1.17
-26.13
-95.71%
Rollins Earnings Call Summary
Earnings Call Date: Feb 12, 2025 | % Change Since: 4.55% | Next Earnings Date: Apr 23, 2025
Earnings Call Sentiment Positive
Rollins reported a strong financial performance for Fiscal 2024, with significant revenue and organic growth, driven by successful operating strategies, strategic investments, and M&A activities. However, the company faced challenges related to incremental margin pressure and legacy auto claims, although these were mitigated by robust cash flow and investment-grade credit ratings. Despite some operational challenges, the overall business outlook remains positive.Highlights
Strong Revenue Growth
Rollins achieved a milestone of $3.4 billion in revenue for Fiscal 2024, with full-year revenue increasing by 10.3% versus last year.
Organic Growth Achievement
The company reported organic growth of 7.9% for the year, supported by strong execution of operating strategies and investment in staffing.
Commercial Division Expansion
Rollins opened a dedicated commercial division within Orkin, increasing its sales force by over 15% and investing in training and support.
M&A Activity
In 2024, Rollins closed 44 tuck-in deals, with an active M&A pipeline that is expected to drive further growth.
Cash Flow Performance
Operating cash flow increased by 23% in the fourth quarter to $188 million, with free cash flow rising 17% for the year.
Investment-Grade Credit Ratings
Fitch and S&P assigned Rollins investment-grade credit ratings of BBB+ and BBB, respectively, enhancing access to capital markets.
Lowlights
Incremental Margin Pressure
Growth investments and legacy auto claims developments impacted incremental margins for the quarter and the year.
Legacy Auto Claims Impact
Insurance and claims experience, particularly related to legacy auto claims, presented a headwind, reducing margins by 40 basis points.
Hiring and Retention Challenges
While overall retention was healthy, there is room for improvement in retaining new team members who have been with the company for six months or less.
Company Guidance
During the Rollins Fourth Quarter 2024 Earnings Conference Call, management provided detailed guidance for the upcoming fiscal year 2025. The company reported achieving $3.4 billion in revenue for 2024, reflecting a 10.3% increase from the previous year. Earnings grew by 7.9%, with adjusted earnings per share rising by 11.2%. Organic growth was noted at 7.9%, supported by strategic investments in staffing, particularly within the newly established commercial division at Orkin, which saw a 15% increase in sales force. Rollins closed 44 tuck-in deals in 2024 and maintains a robust M&A pipeline. For 2025, the company anticipates organic growth between 7% and 8%, supplemented by M&A growth of at least 2% to 3%, and aims to sustain healthy incremental margins. Additionally, Rollins announced receiving investment-grade credit ratings from Fitch and S&P, enhancing its access to capital markets. Management emphasized the importance of maintaining a strong safety culture and improving retention, particularly among new employees. The company remains committed to delivering exceptional customer experiences and fostering continued growth.Rollins Corporate Events
Executive/Board Changes
Rollins Announces Resignation of Chief Accounting Officer
Neutral
Feb 28, 2025
On February 26, 2025, Traci Hornfeck announced her resignation as Chief Accounting Officer of Rollins, Inc., effective March 11, 2025, to pursue another opportunity. Her departure is not due to any disagreements with the company. Kenneth D. Krause, currently the Executive Vice President and Chief Financial Officer, will take over as the principal accounting officer, with no new material agreements or transactions resulting from this change.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.