Rentokil Initial (RTO) AI Stock Analysis

• Market Cap: $12.06B
• Dividend Yield: 2.16%
• Average Volume (3M): 814.88K
• Price to Earnings (P/E): 30.7
• Beta (1Y): 0.95
• Revenue Growth: 3.96%
• EPS Growth: -17.48%
• Country: US
• Employees: 68,485
• Sector: Industrials
• Sector Strength: 93
• Industry: Specialty Business Services
• EPS (TTM): 0.62
• Shares Outstanding: 504,908,000
• 10 Day Avg. Volume: 513,705
• 30 Day Avg. Volume: 814,885
• PEG Ratio: -1.17
• Price to Book (P/B): 2.12
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 17.53
• 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: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0

• Rating: 75 Outperform
• Price Target: $26.00 ▲(9.01%Upside)

Rentokil Initial demonstrates robust financial performance with consistent revenue growth and effective cash flow management. However, concerns about increasing debt levels and challenges in North America are significant factors. Technical indicators show moderate bullish momentum, but valuation metrics suggest a premium pricing. The earnings call reinforced the company's strategic initiatives but also highlighted regional underperformance and integration challenges. Overall, the stock maintains a solid outlook with risks that need to be managed carefully.

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 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 demonstrates strong financial performance with steady revenue growth and healthy profitability. The company maintains a healthy balance sheet, though rising debt levels require attention. Effective cash flow management supports 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
	EBIT
549.00M	625.00M	498.00M	366.20M	301.00M
	EBITDA
990.00M	1.16B	767.00M	656.00M	581.00M
	Net Income Common Stockholders
307.00M	381.00M	232.00M	263.00M	186.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
927.00M	1.55B	2.17B	670.00M	2.12B
	Total Assets
10.55B	11.13B	11.92B	4.32B	5.58B
	Total Debt
4.14B	4.73B	5.40B	1.93B	3.14B
	Net Debt
3.22B	3.19B	3.23B	1.26B	1.19B
	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: 23.85
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• 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 23.85 is above the 20-day moving average (MA) of 23.42, above the 50-day MA of 22.69, and below the 200-day MA of 24.87, indicating a neutral trend. The MACD of 0.24 indicates Negative momentum. The RSI at 60.26 is Neutral, neither overbought nor oversold. The STOCH value of 77.90 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
UNF	84 Outperform	$3.37B	23.49	7.17%	0.74%	5.04%	31.69%
ULS	77 Outperform	$14.39B	42.74	41.07%	0.70%	6.84%	29.09%
RTO	75 Outperform	$12.06B	30.65	7.44%	2.16%	3.96%	-17.48%
CBZ	74 Outperform	$3.91B	48.93	6.25%	―	32.27%	-40.50%
ABM	74 Outperform	$3.18B	40.26	4.46%	1.92%	2.81%	-67.57%
ARMK	71 Outperform	$10.25B	30.11	11.77%	1.02%	-3.47%	-45.03%
Sector *	65 Neutral	$4.41B	12.06	5.22%	249.80%	4.09%	-12.16%