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1. Company Snapshot

1.a. Company Description

Rollins, Inc., through its subsidiaries, provides pest and wildlife control services to residential and commercial customers in the United States and internationally.The company offers pest control services to residential properties protecting from common pests, including rodents, insects, and wildlife.It also provides workplace pest control solutions for customers across various end markets, such as healthcare, foodservice, and logistics.


In addition, the company offers traditional and baiting termite protection, as well as ancillary services.It serves clients directly, as well as through franchisee operations.Rollins, Inc.


was incorporated in 1948 and is headquartered in Atlanta, Georgia.

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1.b. Last Insights on ROL

Rollins, Inc.'s recent performance was driven by strong Q3 results, with double-digit revenue growth of 12% year-over-year, reaching $1 billion, and organic revenue growth of 7.2%. The company's earnings per share (EPS) grew over 20%, with EPS of $0.35, beating estimates of $0.32. This momentum was fueled by broad-based revenue gains and a favorable setup for an earnings beat. Institutional investors, such as World Investment Advisors and Chicago Partners Investment Group, have also shown confidence in the stock, acquiring new positions. Brokerages have a consensus rating of "Moderate Buy" on the stock.

1.c. Company Highlights

2. Rollins' Exceptional Q3 Results Driven by Organic Growth and Successful Integration

Rollins, Inc. reported a strong third quarter with total revenue growth of 12% and organic growth of 7.2%. The adjusted EBITDA margin improved by 120 basis points to 25.2%, driven by leverage across the P&L, resulting in incremental margins of approximately 35%. GAAP earnings per share were up 21% to $0.34, while adjusted earnings per share, excluding certain purchase accounting expenses, were $0.35, beating analyst estimates of $0.32. The company's operating cash flow increased by 30% to $191 million, and free cash flow was up 31% compared to the same period last year.

Publication Date: Nov -03

📋 Highlights
  • Revenue Growth Outperforms Expectations:: Total revenue grew 12% YoY, with organic growth at 7.2%, and Saela’s integration delivered mid-70s revenue growth (exceeding mid-60s forecasts).
  • Strong EBITDA and Margin Expansion:: Adjusted EBITDA margin rose 120 bps to 25.2%, driven by 35% incremental margins, while GAAP EPS increased 21% to $0.34.
  • Robust Cash Flow Generation:: Operating cash flow surged 30% to $191M, free cash flow grew 31%, and the company expects >100% cash flow conversion in 2025.
  • Dividend Increase and M&A Momentum:: Quarterly dividend rose 11% (4th increase since 2022), with $300M invested in M&A and capital expenditures year-to-date.
  • Organic and M&A Growth Targets:: 7–8% organic growth expected for 2024, plus 3–4% from M&A, supported by a $19,000 pest control company landscape in North America.

Operational Highlights and Segment Performance

The integration of Saela, an acquisition made earlier in the year, has progressed smoothly and is exceeding expectations, with revenue growth in the mid-70s range. The commercial division, particularly Orkin, delivered double-digit recurring growth in the third quarter, driven by investments in sales and marketing. As Jerry Gahlhoff noted, the company is happy with the performance of its sales processes and training, targeting a younger demographic through its advertising and marketing efforts.

Margin Expansion and Cash Flow Generation

The company's margin performance was supported by favorability related to insurance and claims, as well as leverage in other key cost areas. Kenneth Krause stated that the company's incremental margins are coming in well above 30%, indicating that productivity is paying off across all aspects of SG&A. The company's cash flow growth is around 24% year-to-date, driven by better focus on receivables and lower cash paid for taxes.

Valuation and Outlook

With a current P/E Ratio of 54.12 and EV/EBITDA of 34.14, the market appears to be pricing in significant growth expectations. Analysts estimate next year's revenue growth at 9.1%. The company's plans for 2026 include continuing to invest in the business, with a focus on growing the company and producing incremental gross margins of 58% or higher. The strong balance sheet, with a leverage ratio of 0.8x, and access to cost-efficient capital position the company well to deliver on its financial objectives.

Growth Strategy and M&A Pipeline

The M&A pipeline remains strong, with 7 deals closed in the third quarter. The company is working to build its capacity to process more deals and invest in its infrastructure to support growth. Kenneth Krause and Jerry Gahlhoff emphasized the importance of being the acquirer of choice, taking care of employees and teammates, and having a diversified approach to acquiring customers.

3. NewsRoom

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Rollins To Host 2025 Sell-Side Analyst Conference at the New York Stock Exchange on December 9th

Dec -01

Source: prnewswire.com

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Advisors Asset Management Inc. Has $8.57 Million Holdings in Rollins, Inc. $ROL

Nov -26

Source: defenseworld.net

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Creative Planning Increases Holdings in Rollins, Inc. $ROL

Nov -26

Source: defenseworld.net

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Rep. Lisa C. McClain Sells Off Shares of Rollins, Inc. (NYSE:ROL)

Nov -26

Source: defenseworld.net

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USDA Secretary Rollins on China's soybean purchase promise

Nov -24

Source: youtube.com

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Avantax Advisory Services Inc. Has $2.10 Million Holdings in Rollins, Inc. $ROL

Nov -22

Source: defenseworld.net

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Alberta Investment Management Corp Has $3.45 Million Holdings in Rollins, Inc. $ROL

Nov -17

Source: defenseworld.net

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Rollins, Inc. (ROL) Presents at Baird 55th Annual Global Industrial Conference Transcript

Nov -13

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.74%)

6. Segments

Residential

Expected Growth: 6.5%

Residential segment growth of 6.5% at Rollins, Inc. is driven by increasing demand for pest control services, fueled by rising homeownership rates, growing awareness of health risks associated with pests, and expansion into new markets. Additionally, the company's focus on digital marketing and customer retention strategies contributes to the segment's growth.

Commercial

Expected Growth: 6.8%

Rollins, Inc.'s commercial segment growth of 6.8% is driven by increasing demand for pest control services, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on digital transformation, customer retention, and pricing strategies have contributed to revenue growth.

Termite Completions, Bait Monitoring, Renewals, & Ancillary

Expected Growth: 7.2%

Rollins, Inc.'s 7.2% growth is driven by strong demand for Termite Completions, effective Bait Monitoring systems, and high customer retention rates resulting in increased Renewals. Additionally, the company's Ancillary services, such as special services and insulation, contribute to the growth. These fundamental drivers demonstrate the company's ability to provide comprehensive pest control solutions, leading to sustained revenue growth.

Other

Expected Growth: 6.2%

Rollins, Inc.'s 6.2% growth is driven by increasing demand for pest control services, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on digital transformation, customer retention, and cost savings initiatives have contributed to its growth momentum.

Franchise

Expected Growth: 7.5%

Strong brand recognition, increasing demand for pest control services, and strategic acquisitions drive Rollins' franchise growth. The company's scalable business model, efficient operations, and effective marketing strategies also contribute to its 7.5% growth rate. Additionally, the growing need for termite control and mosquito services, particularly in the southeastern United States, further supports franchise expansion.

7. Detailed Products

Pest Control Services

Residential and commercial pest control services to eliminate pests and prevent future infestations

Termite Control Services

Termite detection, removal, and prevention services to protect homes and businesses from termite damage

Wildlife Removal Services

Humane removal and relocation of wildlife from homes and businesses

Mosquito Control Services

Mosquito control services to reduce mosquito populations and prevent mosquito-borne illnesses

Specialized Disinfection Services

Disinfection services to eliminate bacteria, viruses, and other microorganisms from homes and businesses

8. Rollins, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Rollins, Inc. is moderate due to the presence of alternative pest control services and products.

Bargaining Power Of Customers

The bargaining power of customers is low due to the fragmented nature of the pest control industry and the lack of concentration among customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate due to the presence of multiple suppliers of pest control products and services.

Threat Of New Entrants

The threat of new entrants is high due to the relatively low barriers to entry in the pest control industry and the attractiveness of the market.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of multiple players in the pest control industry and the need to differentiate services and products to gain market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 41.40%
Debt Cost 3.95%
Equity Weight 58.60%
Equity Cost 7.21%
WACC 5.86%
Leverage 70.64%

11. Quality Control: Rollins, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
H&R Block

A-Score: 5.8/10

Value: 5.6

Growth: 6.1

Quality: 5.5

Yield: 7.0

Momentum: 1.5

Volatility: 9.0

1-Year Total Return ->

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Stock-Card
Rollins

A-Score: 5.8/10

Value: 0.7

Growth: 7.1

Quality: 7.5

Yield: 2.0

Momentum: 7.5

Volatility: 9.7

1-Year Total Return ->

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Stock-Card
SCI

A-Score: 5.7/10

Value: 3.5

Growth: 6.4

Quality: 4.7

Yield: 4.0

Momentum: 6.0

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
Frontdoor

A-Score: 5.2/10

Value: 3.5

Growth: 6.7

Quality: 6.6

Yield: 0.0

Momentum: 8.0

Volatility: 6.7

1-Year Total Return ->

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Stock-Card
KB Home

A-Score: 4.9/10

Value: 6.2

Growth: 7.1

Quality: 5.0

Yield: 3.0

Momentum: 2.5

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
Bright Horizons Family Solutions

A-Score: 3.7/10

Value: 2.5

Growth: 6.0

Quality: 5.5

Yield: 0.0

Momentum: 2.5

Volatility: 5.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

61.39$

Current Price

61.4$

Potential

-0.00%

Expected Cash-Flows