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Atlanta, Georgia-based Rollins, Inc. (ROL) provides pest and wildlife control services to residential and commercial customers in the United States and internationally. With a market cap of $23.4 billion, Rollins offers pest control services to residential properties protecting from common pests, including rodents, insects, and wildlife.
Companies worth $10 billion or more are generally described as "large-cap stocks," Rollins fits right into that category, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the pest and wildlife control services space.
Despite its strengths, Rollins has dipped 9.5% from its all-time of $52.16 achieved on Nov. 13. Furthermore, ROL has plunged over 6.1% in the past three months, underperforming the S&P 500 Index’s ($SPX) 4.5% gains during the same time frame.
Rollins has underperformed the broader market over the longer term as well. ROL has gained 8% on a YTD basis and 10.7% over the past year, compared to SPX’s 23.1% gains in 2024 and 23.9% returns over the past year.
To confirm the bullish trend and the recent downturn, ROL has traded mostly above its 200-day moving average over the past year with minor fluctuations and fallen below its 50-day moving average at the start of December.
Rollins’ stock tanked nearly 6.6% in the trading session after the release of its mixed Q3 results on Oct. 23. Driven by a surge in organic revenues, the company reported a robust 9% year-over-year growth in revenues, reaching $916.3 million. However, due to its expenses increasing faster than revenues, its adjusted operating margins contracted 90 basis points compared to the year-ago quarter to 21.4%. This led to a modest 4.5% growth in adjusted operating income to $196 million. Moreover, its adjusted EPS grew by 3.6% to $0.29 which missed analysts’ estimates by 3.3%, unsettling investor confidence.
Despite the drop in profitability, the company showcased impressive cash flow generation capabilities, with free cash flow for the quarter surging 15.7% year-over-year to $139.4 million, enabling the company’s continued investment in growth to capitalize on a healthy market environment to drive further growth in its business.
Rollins has significantly outpaced its peer Rentokil Initial plc’s (RTO) 10.7% decline on a YTD basis and 5.9% dip over the past 52 weeks.
Among the 10 analysts covering the ROL stock, the consensus rating is a “Moderate Buy.” The mean price target of $50.44 represents a 6.9% premium to current price levels.
