Rentokil Initial (RTO) AI Stock Analysis

• Market Cap: $12.13B
• Dividend Yield: 2.68%
• Average Volume (3M): 861.65K
• Price to Earnings (P/E): 36.3
• Beta (1Y): 0.97
• Revenue Growth: 1.56%
• EPS Growth: -32.50%
• Country: US
• Employees: 68,485
• Sector: Industrials
• Sector Strength: 78
• Industry: Specialty Business Services
• EPS (TTM): 0.62
• Shares Outstanding: 505,207,980
• 10 Day Avg. Volume: 672,928
• 30 Day Avg. Volume: 861,647
• 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: 1.36
• Enterprise Value/Revenue: 3.03
• Enterprise Value/Gross Profit: 22.72
• Enterprise Value/Ebitda: 16.66
• 1Y Price Target: $27.00
• Price Target Upside: 12.50% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 0

• Rating: 76 Outperform
• Price Target: $27.00 ▲(12.50% Upside)

Rentokil Initial's overall stock score reflects strong financial performance and positive technical indicators. However, high valuation and challenges in North America, as discussed in the earnings call, temper the outlook. Continued focus on strategic investments and addressing regional performance issues will be key to future success.

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 through multiple streams, primarily from its pest control and hygiene services. The company operates on a subscription-based model, where clients pay for ongoing service contracts for pest management and hygiene solutions, providing a steady and recurring income. Additionally, Rentokil Initial earns revenue from one-time services, product sales, and specialized treatments. Partnerships with businesses in various sectors, including hospitality and food production, enhance its customer base and revenue potential. The company's focus on innovation, such as the development of smart pest control technologies, also contributes to its earnings by attracting new clients and retaining existing ones.

Rentokil Initial Financial Statement Overview

Summary

Rentokil Initial exhibits strong financial performance with steady revenue growth and solid profitability margins. Although there are concerns about rising debt levels, the company maintains robust cash flow, supporting strategic investments.

Income Statement

Rentokil Initial has demonstrated steady revenue growth, with a significant increase from 2020 to 2024. The gross profit margin and net profit margin indicate healthy profitability, although there was a slight decline in EBIT and EBITDA margins between 2023 and 2024. The company's ability to maintain a high revenue growth rate and strong margins highlights its competitive positioning in the corporate services industry.

Balance Sheet

The balance sheet reflects a strong equity base with a moderate debt-to-equity ratio, indicating prudent financial leverage. The equity ratio is stable, but there is a noticeable increase in total debt over the years. Return on equity is healthy, driven by consistent net income growth, though the rising debt level poses a potential risk if not managed carefully.

Cash Flow

Operating cash flow remains robust, supporting the company's free cash flow generation. The free cash flow to net income and operating cash flow to net income ratios are favorable, showcasing effective cash conversion. However, the free cash flow growth rate has been inconsistent, suggesting fluctuations in capital expenditures and cash management strategies.

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	726.00M	4.45B	977.00M	714.80M	653.00M
EBITDA	990.00M	1.16B	767.00M	656.00M	581.00M
Net Income	307.00M	381.00M	232.00M	263.00M	186.00M
Balance Sheet
Total Assets	10.55B	11.13B	11.92B	4.32B	5.58B
Cash, Cash Equivalents and Short-Term Investments	927.00M	1.55B	2.17B	670.00M	2.12B
Total Debt	4.14B	4.73B	5.40B	1.93B	3.14B
Total Liabilities	6.33B	7.04B	7.82B	3.06B	4.45B
Stockholders Equity	4.23B	4.09B	4.10B	1.26B	1.13B
Cash Flow
Free Cash Flow	507.00M	526.00M	414.00M	407.20M	382.60M
Operating Cash Flow	678.00M	737.00M	604.00M	567.10M	535.10M
Investing Cash Flow	-373.00M	-416.00M	-1.20B	-445.00M	-509.20M
Financing Cash Flow	-752.00M	-361.00M	1.32B	-417.10M	253.50M

Rentokil Initial Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 24.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RTO, the sentiment is Positive. The current price of 24 is below the 20-day moving average (MA) of 24.31, above the 50-day MA of 23.88, and above the 200-day MA of 23.76, indicating a bullish trend. The MACD of 0.09 indicates Positive momentum. The RSI at 53.62 is Neutral, neither overbought nor oversold. The STOCH value of 44.37 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RTO.

Rentokil Initial Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RTO	76 Outperform	$12.13B	36.34	5.86%	2.68%	1.56%	-32.50%
ABM	75 Outperform	$3.04B	39.16	4.30%	2.08%	3.52%	-67.27%
UNF	74 Outperform	$3.13B	21.58	7.15%	0.78%	4.18%	18.93%
ULS	70 Outperform	$12.70B	38.59	35.12%	0.81%	6.92%	21.82%
ARMK	67 Neutral	$10.36B	29.17	12.00%	1.07%	-0.06%	3.83%
CBZ	65 Neutral	$3.51B	37.93	7.84%	―	46.49%	-25.62%
Sector *	64 Neutral	$10.95B	16.37	8.81%	1.96%	2.68%	-15.33%