Rollins, Inc. Faces Headwinds Despite Strong Revenue Growth
Founded in Atlanta, Georgia, Rollins, Inc. (ROL) is a leading provider of pest and wildlife control services, catering to both residential and commercial clients across the globe. With a market capitalization of $23.4 billion, Rollins ranks among the “large-cap stocks,” emphasizing its significant market presence and influence within the pest control industry.
Stock Performance Shows Recent Struggles
Despite its market strengths, Rollins’ stock has fallen by 9.5% from its peak of $52.16 on November 13. Additionally, ROL has declined over 6.1% in the last three months, while the S&P 500 Index ($SPX) saw a 4.5% increase during the same period.
Comparative Analysis Over the Year
Looking at a broader picture, Rollins has also struggled with long-term performance. Year-to-date, ROL has appreciated by 8% and by 10.7% over the past twelve months. In contrast, the S&P 500 has posted significant gains of 23.1% in 2024 and 23.9% over the last year.
Current trading patterns reveal that ROL has mostly stayed above its 200-day moving average in the past year, though it fell below the 50-day average in early December.
Investor Reaction to Mixed Q3 Earnings
After announcing mixed Q3 results on October 23, Rollins’ stock tumbled nearly 6.6%. The company reported a solid 9% year-over-year revenue growth, totaling $916.3 million, largely due to increased organic revenues. However, costs rose quicker than income, causing adjusted operating margins to contract by 90 basis points to 21.4%. This resulted in only a modest 4.5% increase in adjusted operating income to $196 million. Furthermore, the adjusted EPS grew by 3.6% to $0.29, falling short of analysts’ expectations by 3.3%, affecting investor sentiment.
Nevertheless, Rollins demonstrated strong cash flow generation, with free cash flow increasing 15.7% year-over-year to $139.4 million. This robust cash flow supports ongoing investments aimed at capitalizing on favorable market conditions and driving future business growth.
Peer Comparison and Analyst Perspectives
On a year-to-date basis, Rollins has outperformed its peer Rentokil Initial plc (RTO), which has seen a 10.7% decline year-to-date and a 5.9% drop over the past year.
Among ten analysts tracking ROL, the consensus rating is a “Moderate Buy,” with a mean price target of $50.44 indicating a 6.9% upside from current levels.
On the date of publication, Aditya Sarawgi did not hold (either directly or indirectly) any positions in the securities mentioned in this article. All information and data are for informational purposes only. For additional details, please refer to the Barchart Disclosure Policy.
The views expressed in this article are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
