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Rollins (ROL)
NYSE:ROL
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Rollins
(NYSE:ROL)
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Rating:80Outperform
Price Target:
$74.00
▲(25.15% Upside)
Action:ReiteratedDate:02/12/26
ROL scores well on financial quality (durable margins and strong cash conversion) and supportive technicals (clear uptrend with positive momentum). The main constraint is valuation, with a very high P/E and modest yield, while the earnings call was constructive with upbeat 2026 growth/cash-flow expectations but some near-term weather and margin variability.
Positive Factors
High recurring revenue mix & organic growth
A large majority of revenue is recurring or ancillary (~80%+) and grew organically above 7%, providing predictable, sticky cash flows. This recurring mix supports durable top-line resilience, easier forecasting, and higher lifetime customer value, underpinning multi-year revenue stability and lower churn risk.
Very strong cash generation & conversion
Free cash flow closely tracks reported earnings (~96% of net income) and management delivered exceptional quarterly conversion (Q4 noted >100% in the call). High cash conversion underpins sustainable reinvestment, shareholder returns, disciplined M&A, and provides a buffer through cycles.
Proven M&A execution and capital allocation
Successful integration of Sela and 26 tuck-ins demonstrates a repeatable bolt-on strategy that augments organic growth. Disciplined capital deployment (significant buybacks and dividends alongside acquisitions) supports durable revenue scale, local market share gains and incremental EPS accretion over time.
Negative Factors
Recent revenue growth slowdown
Although multi-year growth is positive, the recent TTM slowdown signals cooling momentum that could limit margin leverage and raise dependence on M&A to hit targets. If organic acceleration stalls, the company may face pressure to sustain double-digit outcomes without incremental cost improvements.
Fleet & cost pressures reducing margins
Material fleet headwinds and timing of vehicle gains, plus higher SG&A investment, compressed gross and incremental margins. Fleet replacement cycles and elevated people costs are structural cost items that can persist into multiple quarters and limit margin expansion absent operational fixes.
Recent increase in debt levels
Leverage remains moderate overall, but the recent uptick in debt reduces financial flexibility. If free cash flow softens or M&A needs accelerate, higher debt could constrain capital allocation choices or push leverage targets higher, increasing refinancing and covenant risk over the medium term.
Rollins (ROL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$29.11B
Dividend Yield1.12%
Average Volume (3M)3.08M
Price to Earnings (P/E)55.6
Beta (1Y)0.48
Revenue Growth11.17%
EPS Growth9.81%
CountryUS
Employees20,000
SectorConsumer Cyclical
Sector Strength84
IndustryPersonal Products & Services
Share Statistics
EPS (TTM)0.24
Shares Outstanding481,092,220
10 Day Avg. Volume4,991,156
30 Day Avg. Volume3,075,409
Financial Highlights & Ratios
PEG Ratio4.07
Price to Book (P/B)21.14
Price to Sales (P/S)7.73
P/FCF Ratio44.70
Enterprise Value/Market Cap1.02
Enterprise Value/Revenue7.89
Enterprise Value/Gross Profit15.20
Enterprise Value/Ebitda34.78
Forecast
1Y Price Target
$66.00Price Target Upside11.62% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering11
EPS Forecast (FY)1.23
Revenue Forecast (FY)$4.11B
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 generates revenue primarily through the provision of pest control services and related products. The company's revenue model is built on a mix of recurring service contracts, one-time service calls, and product sales. A significant portion of its income derives from long-term contracts with residential and commercial clients, ensuring a steady revenue stream. Additionally, Rollins benefits from ancillary sales, including pest control products marketed through its subsidiaries. Strategic partnerships with other service providers and suppliers further bolster its earnings potential, while the company's commitment to customer service and operational efficiency helps maintain customer retention and satisfaction.
Rollins Earnings Call Summary
Earnings Call Date:Feb 11, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 29, 2026
Earnings Call Sentiment Positive
The call presented a broadly positive picture: strong full-year results (11% revenue growth), double-digit gains in adjusted EBITDA and cash flow, healthy organic growth anchored in recurring revenue and ancillary services, successful M&A execution (Sela and tuck-ins), improved retention, strong capital returns and a confident 2026 outlook (7%–8% organic growth plus 2%–3% M&A). Near-term headwinds were primarily weather-driven softness in one-time business in Q4, fleet and timing-related margin impacts, higher SG&A as a percentage of revenue, and some cash flow timing items; management characterizes these as transitory and emphasized investments and structural improvements that should drive margin expansion and sustained growth in 2026.Q4-2025 Updates
Positive Updates
Record Revenue for Fiscal 2025
Rollins achieved $3,800,000,000 in revenue for fiscal 2025, representing robust full-year revenue growth of 11%.
Strong Organic Growth
Organic growth was 6.9% for the year and 5.7% in Q4; recurring revenue and ancillary services (over 80% of revenue) grew at over 7% organically.
Double-Digit Earnings and Cash Flow Growth
Adjusted EBITDA grew 10.8% to $854,000,000. Operating cash flow was $678,000,000 (up 11.6%) and free cash flow was $650,000,000 (up 12.1%); excluding a $22,000,000 out-of-period tax payment, free cash flow growth was ~20%.
Q4 Profitability Metrics
Q4 GAAP operating income was $160,000,000 (up 6.3% YoY); adjusted operating income was $167,000,000 (up 8.1%). Q4 EBITDA was $194,000,000 with an EBITDA margin of 21.2%.
Residential, Commercial and Termite Growth in Q4
Q4 revenue up 9.7% overall; residential +9.7%, commercial pest control +8.7%, termite & ancillary +11.9% (ancillary growing mid-to-high teens, often ~20%).
Capital Allocation and Shareholder Returns
Deployed over $880,000,000 of capital in 2025, paid $88,000,000 in dividends in Q4 (dividends increased 11% YoY; regular dividend up >80% since 2022) and repurchased ~ $200,000,000 of shares in the quarter.
M&A Execution and Contribution
Closed acquisition of Sela and 26 tuck-ins in 2025; Sela contributed ~$16,000,000 in Q4 and ~$55,000,000 YTD and delivered ~$0.02 of adjusted EPS accretion. Company expects 2%–3% additional growth from M&A in 2026 with a robust pipeline.
Balance Sheet Strength and Leverage
Leverage ratio at 0.9x, maintaining an investment-grade approach with target leverage well under 2x, supporting continued M&A and shareholder returns.
Operational and Talent Improvements
Invested in leadership (CoLab) and talent development; improved retention of teammates with <=1 year tenure by ~8% in 2025 (nearly 18% since 2023), reducing onboarding costs and expected to improve long-term productivity.
Confident 2026 Outlook
Management reaffirmed outlook for 2026: expecting double-digit revenue, earnings, and cash flow growth, anchored to 7%–8% organic growth plus 2%–3% from M&A and >100% cash conversion again.
Negative Updates
Q4 Weather-Driven One-Time Revenue Decline
Early winter weather in the Midwest and Northeast weighed on one-time and seasonal projects; one-time revenue declined almost 3% in Q4 after growing ~4% through the first nine months of 2025. One-time work is ~15% of revenue and historically grows ~1%–2% annually.
Gross Margin and Cost Pressures in Q4
Gross margin in Q4 was 51%, down 30 basis points YoY. Fleet expenses were a primary headwind (80 basis points) due to timing of vehicle gains; deleverage from people costs also pressured margins.
SG&A and Incremental Margin Impact
SG&A as a percent of revenue increased 50 basis points in Q4 as management continued to invest for long-term growth; incremental EBITDA margin in the quarter was below 20%.
Quarterly Operating Cash Flow Decrease
Operating cash flow declined 12.4% in Q4 to $165,000,000, driven in part by a $22,000,000 tax payment that had been deferred the prior year; free cash flow was strong but quarterly cash flow timing was unfavorable.
Fleet-Related Headwind in 2025
Fleet-related impacts (including a $17,000,000 headwind in 2025 and roughly $6,000,000 in Q4 tied to vehicle sale timing) hurt near-term margins and were called out as a specific 2025 drag.
Operational Productivity Effects from Staffing Strategy
Management intentionally maintained higher staffing ahead of peak season to avoid large ramp-ups later; however, higher staffing in shoulder-season periods reduced productivity and pressured short-term profitability.
Uncertainty for Q1 2026 Due to Weather Volatility
Management noted Q1 could be slower and is difficult to predict due to ongoing weather volatility (branch closures, ice/sleet events); January had some disruption and could cause near-term softness.
Company Guidance
Rollins guided to 2026 organic growth of 7%–8% plus at least 2%–3% from M&A (implying roughly 9%–11% total topline growth) and reiterated expectations for another year of double‑digit revenue, earnings, and cash‑flow growth; management expects pricing to add ~3%–4%, aims to continue improving incremental margins toward a 25%–30% profile, and anticipates cash‑flow conversion above 100% (after generating $678M of operating cash flow and $650M of free cash flow in 2025, and a Q4 free‑cash‑flow conversion of 137%). They noted a possible slower start to Q1 due to weather/one‑time volatility (one‑time work was down ~3% in Q4 after growing ~4% year‑to‑date), plan to remain investment‑grade with leverage ~0.9x (well under a 2x target), and expect to support growth through disciplined M&A and continued capital allocation.Rollins Financial Statement Overview
Summary
High-quality profitability and cash generation (TTM gross margin ~52.9%, operating margin ~19.5%, net margin ~14.0%; FCF ~96% of net income). Offsetting factors are decelerating recent revenue growth, a year-over-year dip in TTM free cash flow, and some recent debt increase despite generally manageable leverage.Income Statement
ROL shows strong and consistent profitability with healthy margins in TTM (Trailing-Twelve-Months): gross margin ~52.9%, operating margin ~19.5%, and net margin ~14.0%. Earnings have grown alongside revenue over the multi-year period, and margins have remained stable-to-improving versus earlier years. The main weakness is the sharp slowdown in the most recent reported revenue growth (TTM is modest versus prior years), indicating a cooler near-term growth trajectory despite solid underlying profitability.86
Very Positive
Balance Sheet
The balance sheet looks solid, supported by strong returns on equity (about mid-30% in both 2024 and TTM), indicating efficient profit generation. Leverage is moderate: debt is meaningful but not excessive, with debt-to-equity around ~0.60 in TTM (Trailing-Twelve-Months), improved from the higher level seen in 2023. A key watch item is that debt increased in the latest period versus 2024, which could reduce flexibility if growth stays muted.78
Positive
Cash Flow
Cash generation is strong and high-quality. Operating cash flow and free cash flow are both robust in TTM (Trailing-Twelve-Months), and free cash flow is closely aligned with reported earnings (free cash flow is ~96% of net income), supporting earnings credibility. The main drawback is that free cash flow declined year over year in TTM, suggesting some near-term pressure (working capital timing or higher reinvestment) even though overall conversion remains strong.83
Very Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 3.76B | 3.39B | 3.07B | 2.70B | 2.42B |
| Gross Profit | 1.86B | 1.79B | 1.60B | 1.39B | 1.26B |
| EBITDA | 854.23M | 770.44M | 688.17M | 584.71M | 534.19M |
| Net Income | 526.71M | 466.38M | 434.96M | 368.60M | 356.56M |
Balance Sheet | |||||
| Total Assets | 3.14B | 2.82B | 2.60B | 2.12B | 2.02B |
| Cash, Cash Equivalents and Short-Term Investments | 100.00M | 90.63M | 104.83M | 95.85M | 105.30M |
| Total Debt | 1.33B | 812.53M | 816.35M | 533.22M | 402.76M |
| Total Liabilities | 1.77B | 1.49B | 1.44B | 854.83M | 910.32M |
| Stockholders Equity | 1.37B | 1.33B | 1.16B | 1.27B | 1.11B |
Cash Flow | |||||
| Free Cash Flow | 650.02M | 580.08M | 495.90M | 435.30M | 374.61M |
| Operating Cash Flow | 678.11M | 607.65M | 528.37M | 465.93M | 401.81M |
| Investing Cash Flow | -326.70M | -176.23M | -372.89M | -134.14M | -98.97M |
| Financing Cash Flow | -343.58M | -440.71M | -149.42M | -336.02M | -290.16M |
Rollins Technical Analysis
Negative
59.13
Price Trends
61.49
Negative
59.85
Positive
58.21
Positive
Market Momentum
-0.43
Positive
44.39
Neutral
49.96
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ROL, the sentiment is Negative. The current price of 59.13 is below the 20-day moving average (MA) of 62.36, below the 50-day MA of 61.49, and above the 200-day MA of 58.21, indicating a neutral trend. The MACD of -0.43 indicates Positive momentum. The RSI at 44.39 is Neutral, neither overbought nor oversold. The STOCH value of 49.96 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ROL.
Rollins Risk Analysis
Rollins disclosed 1 risk factors in its most recent earnings report. Rollins reported the most risks in the "Legal & Regulatory" 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
UnderperformOutperform
Sector (61)
ROL
Rollins
59.13
8.47
16.71%
FTDR
frontdoor
56.30
-0.87
-1.52%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.