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Rentokil Initial (RTO)
NYSE:RTO
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Rentokil Initial
(NYSE:RTO)
71Outperform
Rentokil Initial (RTO) vs. S&P 500 (SPY)
Market Cap
$11.47B
Dividend Yield2.23%
Average Volume (3M)922.73K
Price to Earnings (P/E)29.2
Beta (1Y)1.14
Revenue Growth3.96%
EPS Growth-17.48%
CountryUS
Employees68,485
SectorIndustrials
Sector Strength67
IndustrySpecialty Business Services
Share Statistics
EPS (TTM)0.78
Shares Outstanding504,908,000
10 Day Avg. Volume857,730
30 Day Avg. Volume922,732
Financial Highlights & Ratios
PEG Ratio0.79
Price to Book (P/B)N/A
Price to Sales (P/S)1.61
Price to Cash Flow (P/CF)14.20
P/FCF Ratio15.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
Rentokil Initial Business Overview & Revenue Model
Company DescriptionRentokil 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 MoneyRentokil Initial generates revenue primarily through its pest control and hygiene service offerings. The company's pest control services include the identification, prevention, and eradication of pests across residential, commercial, and industrial properties. These services are provided through one-time treatments or ongoing service agreements, which create a recurring revenue stream. The hygiene services division offers products and services such as hand hygiene, air care, and washroom solutions, which are typically contracted on a subscription basis. Rentokil Initial also benefits from strategic partnerships and acquisitions that expand its market reach and service capabilities. The company's earnings are further supported by its extensive global network, allowing it to leverage economies of scale and maintain a competitive edge in the industry.
Rentokil Initial Financial Statement Overview
Summary
Rentokil Initial is in a strong financial position with impressive revenue growth and solid cash flow generation. The balance sheet reflects prudent financial management with a stable capital structure. While profitability metrics can improve, the company's financial health is sound, positioning it well for future growth.Income Statement
Rentokil Initial shows strong revenue growth with a notable increase in total revenue from 2022 to 2023. The company maintains robust gross profit and EBIT margins, indicating efficient operations and cost management. However, the net profit margin is relatively moderate, suggesting there might be room for improving net profitability.85
Very Positive
Balance Sheet
The company has a moderate debt-to-equity ratio, which suggests a balanced approach to leveraging debt. The equity ratio is healthy, reflecting a solid capital base. However, the return on equity is moderate, indicating that there could be improvements in generating returns for shareholders.78
Positive
Cash Flow
Rentokil Initial demonstrates strong free cash flow growth, which is a positive indicator of financial health and the ability to reinvest in the business or return value to shareholders. The operating cash flow to net income ratio is robust, signifying strong cash generation from operations.82
Very Positive
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 5.41B | 5.38B | 3.71B | 2.95B | 2.79B | 2.68B | Gross Profit |
| 784.00M | 4.45B | 977.00M | 714.80M | 653.00M | 577.20M | EBIT |
| 720.00M | 625.00M | 498.00M | 366.20M | 301.00M | 254.70M | EBITDA |
| 1.04B | 1.16B | 767.00M | 656.00M | 581.00M | 580.60M | Net Income Common Stockholders |
| 392.00M | 381.00M | 232.00M | 263.00M | 186.00M | 283.80M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 132.30M | 1.55B | 2.17B | 670.00M | 2.12B | 1.17B | Total Assets |
| 3.08B | 11.13B | 11.92B | 4.32B | 5.58B | 4.25B | Total Debt |
| 1.27B | 4.73B | 5.40B | 1.93B | 3.14B | 2.22B | Net Debt |
| 1.14B | 3.19B | 3.23B | 1.26B | 1.19B | 1.05B | Total Liabilities |
| 2.25B | 7.04B | 7.82B | 3.06B | 4.45B | 3.25B | Stockholders Equity |
| 832.20M | 4.09B | 4.10B | 1.26B | 1.13B | 1.00B |
| Cash Flow | Free Cash Flow | ||||
| 523.00M | 526.00M | 414.00M | 407.20M | 382.60M | 322.40M | Operating Cash Flow |
| 716.00M | 737.00M | 604.00M | 567.10M | 535.10M | 493.30M | Investing Cash Flow |
| -325.00M | -416.00M | -1.20B | -445.00M | -509.20M | -91.50M | Financing Cash Flow |
| -376.00M | -361.00M | 1.32B | -417.10M | 253.50M | -221.30M |
Rentokil Initial Technical Analysis
Neutral
23.16
Price Trends
24.15
Negative
24.90
Negative
26.60
Negative
Market Momentum
-0.51
Negative
49.18
Neutral
84.58
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RTO, the sentiment is Neutral. The current price of 23.16 is above the 20-day moving average (MA) of 22.77, below the 50-day MA of 24.15, and below the 200-day MA of 26.60, indicating a neutral trend. The MACD of -0.51 indicates Negative momentum. The RSI at 49.18 is Neutral, neither overbought nor oversold. The STOCH value of 84.58 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for RTO.
Rentokil Initial Risk Analysis
Rentokil Initial disclosed 27 risk factors in its most recent earnings report. Rentokil Initial 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
Rentokil Initial Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $82.61B | 46.69 | 40.19% | 0.74% | 7.79% | 19.21% | |
78 Outperform | $26.09B | 55.09 | 37.52% | 1.19% | 10.26% | 8.47% | |
75 Outperform | $71.67B | 34.24 | 25.14% | 0.94% | 2.75% | 54.39% | |
71 Outperform | $11.47B | 29.24 | 7.44% | 2.23% | 3.96% | -17.48% | |
70 Outperform | $10.74B | 26.88 | 16.69% | ― | 8.89% | 6.76% | |
62 Neutral | $8.27B | 14.02 | 2.58% | 3.08% | 3.83% | -15.91% | |
42 Neutral | $385.34M | ― | -61.32% | ― | 773.30% | -54.75% |
* Industrials Sector Average
Performance Comparison
RTO
Rentokil Initial
23.16
-6.11
-20.87%
CTAS
Cintas
206.25
37.42
22.16%
CLH
Clean Harbors
199.43
2.39
1.21%
ECL
Ecolab
252.68
26.97
11.95%
ROL
Rollins
53.78
8.64
19.14%
SERV
Serve Robotics Inc
6.77
1.87
38.16%
Rentokil Initial Earnings Call Summary
Earnings Call Date: Mar 6, 2025 | % Change Since: -7.91% | Next Earnings Date: Jul 31, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong international growth and improvements in customer and colleague retention. However, it was overshadowed by challenges in North America, including lower-than-expected revenue growth, profit declines, and integration complexities. The company is implementing strategic changes to address these issues, but the overall sentiment reflects the significant challenges that remain.Highlights
International Revenue Growth
International businesses outside of North America delivered strong revenue growth of 8.2%, with organic revenue contributing 4.7%. Pest Control organic growth was particularly strong at 5.3%.
Customer and Colleague Retention
Colleague retention increased by 2.4%, reducing recruitment needs by around 1,000 people. Customer satisfaction improved with a one-point increase in Net Promoter Score and customer retention rose by 50 basis points.
Satellite Branch Expansion
Opened 10 satellite branches in Q4, with a plan to exceed 500 locations including satellites. The satellite branches are part of a strategy to enhance local presence and operational efficiency.
Workwear Business Performance
French Workwear business delivered revenue growth of 7.1%, all organic, with adjusted operating profit growing by 8.6% and margins at 17.7%.
International Business Growth
International revenue grew by 8.2% to GBP 2.2 billion, with 4.7% organic growth led by Pest Control and Workwear. The Europe and LatAm region saw a 5% increase, with adjusted operating profit also up by 5.7%.
Lowlights
North America Underperformance
North American revenue grew by only 1.3%, with organic growth at 1.5%. Adjusted operating profit declined by 7% due to below-plan revenue growth and higher in-year investments.
Profit Decline and Margin Reduction
Adjusted operating profit was down 7.1% to GBP 860 million, with a corresponding margin reduction of 130 basis points.
Cost and Investment Inefficiencies
A portion of investments in 2024 did not drive optimal effectiveness, leading to suboptimal sales and marketing returns. These will be redirected in 2025.
Integration Challenges
The integration of Terminix is complex and has led to periods of disruption. The program is expected to be complete by the end of 2026, with significant cost savings anticipated post-integration.
Weak Q1 Start and Lead Generation Issues
Q1 2025 is off to a slow start due to weak lead flow, adverse weather, and the leap year effect. Lead generation and sales conversion are areas needing significant improvement.
Company Guidance
During the call, Rentokil Initial provided guidance on its performance and strategy for 2025. The company reported a revenue of GBP 5.6 billion in 2024, marking a 3.9% increase, with organic growth at 2.8%. The North American business underperformed with only 1.3% growth, while International saw an 8.2% increase. Customer retention improved by 60 basis points to 80.1%, and colleague retention increased by 4.2%. The company plans to continue its integration of Terminix, aiming to achieve operating profit margins above 20% by 2027. For 2025, Rentokil aims to enhance lead generation, improve sales conversion, and expand its branch network to over 500 locations, including new satellite branches. The company's capital allocation strategy prioritizes organic investment, bolt-on acquisitions, and a progressive dividend policy, with a target net debt-to-EBITDA ratio of 2 to 2.5x. Rentokil expects to meet market expectations for 2025 despite a slow start in Q1.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.