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Rentokil (RTO)
:RTO
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Rentokil Initial
(NYSE:RTO)
Rating:76Outperform
Price Target:
$27.00
▲(15.68% Upside)
Rentokil Initial (RTO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$12.07B
Dividend Yield2.48%
Average Volume (3M)826.41K
Price to Earnings (P/E)35.9
Beta (1Y)0.96
Revenue Growth1.56%
EPS Growth-32.50%
CountryUS
Employees68,485
SectorIndustrials
Sector Strength84
IndustrySpecialty Business Services
Share Statistics
EPS (TTM)0.62
Shares Outstanding505,207,980
10 Day Avg. Volume1,107,149
30 Day Avg. Volume826,408
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)0.00
Price to Sales (P/S)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.37
Enterprise Value/Revenue3.03
Enterprise Value/Gross Profit22.72
Enterprise Value/Ebitda16.66
Forecast
1Y Price Target
$26.00Price Target Upside11.40% Upside
Rating ConsensusHold
Number of Analyst Covering0
Rentokil Initial Business Overview & Revenue Model
Company DescriptionRentokil Initial (RTO) is a leading global services company specializing in pest control and hygiene services. With operations in over 80 countries, the company provides essential services to both commercial and residential customers, ensuring safe and hygienic environments. Rentokil Initial is renowned for its innovative pest control solutions and comprehensive hygiene services, which include washroom hygiene and commercial cleaning services, catering to a wide range of industries such as hospitality, healthcare, and food processing.
How the Company Makes MoneyRentokil Initial generates revenue primarily through its two main business segments: pest control and hygiene services. The pest control segment provides services to control and eliminate pests such as rodents, insects, and other unwanted wildlife in residential and commercial properties, often through recurring service contracts. This segment benefits from its strong brand recognition and expertise in advanced and environmentally friendly pest management solutions. The hygiene services segment offers washroom hygiene products and services, including hand sanitizers, air fresheners, and sanitary disposal, along with commercial cleaning services. Rentokil Initial's revenue model is bolstered by long-term contracts with businesses, recurring service agreements, and a focus on expanding its service offerings through strategic acquisitions and partnerships, which enhance its market presence and operational capabilities.
Rentokil Initial Key Performance Indicators (KPIs)
Any
Revenue at Constant Rates by Geography
Analyzes revenue across different regions while adjusting for currency fluctuations, highlighting stable growth areas and potential vulnerabilities in diverse markets.
Analyzes revenue across different regions while adjusting for currency fluctuations, highlighting stable growth areas and potential vulnerabilities in diverse markets.
Data provided by:
Main Street Data
Main Street DataRentokil Initial Earnings Call Summary
Earnings Call Date:Jul 31, 2025
(Q4-2024)
| % Change Since: 1.30%|
Next Earnings Date:Feb 26, 2026
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.Q4-2024 Updates
Positive Updates
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%.
Negative Updates
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.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.85
Very Positive
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.78
Positive
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.82
Very Positive
| 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
Negative
23.34
Price Trends
23.79
Negative
23.19
Positive
23.99
Negative
Market Momentum
0.03
Positive
48.58
Neutral
28.86
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RTO, the sentiment is Negative. The current price of 23.34 is below the 20-day moving average (MA) of 23.77, below the 50-day MA of 23.79, and below the 200-day MA of 23.99, indicating a bearish trend. The MACD of 0.03 indicates Positive momentum. The RSI at 48.58 is Neutral, neither overbought nor oversold. The STOCH value of 28.86 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (71)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $12.07B | 35.89 | 5.86% | 2.48% | 1.56% | -32.50% | |
75 Outperform | $0.00 | 37.23 | 4.30% | 2.24% | 3.52% | -67.27% | |
74 Outperform | $14.42B | 42.81 | 41.07% | 0.71% | 6.84% | 29.09% | |
72 Outperform | $3.38B | 36.15 | 7.84% | ― | 46.49% | -25.62% | |
71 Outperform | ¥257.35B | 14.36 | 8.48% | 2.83% | 6.31% | 12.01% | |
71 Outperform | $11.14B | 32.70 | 12.00% | 0.96% | -3.47% | -45.03% | |
61 Neutral | $3.07B | 21.24 | 7.15% | 0.80% | 4.18% | 18.93% |
* Industrials Sector Average
Performance Comparison
RTO
Rentokil Initial
23.64
-5.45
-18.73%
ABM
ABM Industries
46.97
-3.96
-7.78%
CBZ
CBIZ
62.68
-5.38
-7.90%
UNF
UniFirst
171.87
-8.17
-4.54%
ARMK
ARAMARK Holdings
39.56
6.26
18.80%
ULS
UL Solutions Inc. Class A
64.63
15.16
30.64%
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.