Entering text into the input field will update the search result below

Rollins: Strong Q2 But Questionable Valuation

Aug. 01, 2021 11:42 PM ETRollins, Inc. (ROL)9 Comments
Vasily Zyryanov profile picture
Vasily Zyryanov


  • On July 28, ROL presented its Q2 results, with revenue and EPS coming above the consensus estimates, thus bringing the count of consistent quarterly revenue surprises to 9.
  • Total Q2 revenues were up by over 15% to $638.2 million, largely driven by growth in two lines that account for most of the sales: commercial and residential.
  • 2021 has been a challenging year for the company, as the share price has been riding a bumpy rollercoaster.
  • ROL is exhibiting characteristics of a growth stock trading at a huge premium both to the industry and to the peer. But is it worth overpaying? My answer is no.
  • Last year, I said the stock might be considered if EV/EBITDA dips below 30x, and I still think it might be worth considering with the multiple in the twenties. But now, all things considered, ROL is a Hold.
Disinfection of bars,cafes and restaurants during COVID-19 pandemic
martin-dm/E+ via Getty Images

There is no doubt that Rollins, Inc. (NYSE:ROL) is a great company, almost recession-immune as termites and other annoying pests do not take recession breaks, with a successful inorganic growth strategy, copious cash flows, and a strong balance sheet with single-digit Debt/Equity and

This article was written by

Vasily Zyryanov profile picture
Vasily Zyryanov is an individual investor and writer.He uses various techniques to find both relatively underpriced equities with strong upside potential and relatively overappreciated companies that have inflated valuation for a reason.In his research, he pays much attention to the energy sector (oil & gas supermajors, mid-cap, and small-cap exploration & production companies, the oilfield services firms), while he also covers a plethora of other industries from mining and chemicals to luxury bellwethers.He firmly believes that apart from simple profit and sales analysis, a meticulous investor must assess Free Cash Flow and Return on Capital to gain deeper insights and avoid sophomoric conclusions.While he favors underappreciated and misunderstood equities, he also acknowledges that some growth stocks do deserve their premium valuation, and its an investor's primary goal to delve deeper and uncover if the market's current opinion is correct or not.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (9)

BM Cashflow Detective profile picture
Rollins is extremely poor value based on its 5y PEG ratio of 6.56

and also extem poor value based on its 3y P/FCF/G ratio of 8.87.

I'm long $ROL. After that, it's a definite hold.

This stock is the one after the eighth wonder of the world,

the compound interest,

basically the ninth.
Pillpoppinpuppy profile picture
I challenge you to find a company with a 34% ROIC, a 19% sustainable growth rate, growing revenue at 15% with a 34% incremental EBIT margin that is cheaper -- you will be looking for a long time.
Pillpoppinpuppy profile picture
@Pillpoppinpuppy Do you think that Delta is going to result in an unexpected surge in sales of their disinfectant product?
@Pillpoppinpuppy what is Rollins disinfectant product?
Pillpoppinpuppy profile picture
@sutterhome1971 The Orkin® VitalClean™ service uses a powerful but eco-friendly disinfectant on EPA’s “List N” of products for use against the coronavirus that causes COVID-19.

Why this disinfectant product?
EPA-labeled and effective against multiple coronavirus strains
On EPA’s “List N” of products for use against the coronavirus that causes COVID-19
Label assures 100% disinfection of hard, non-porous surfaces and sanitization of soft, porous surfaces.
Can be applied to soft surfaces as well, unlike many other disinfectants
Eco-friendly and lowest EPA toxicity rating
Our customers’ spaces will be dry and usable again within 15-30 minutes
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.