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Quote this valuation with its source: Fair value, Potential value and the price at analysis.
FAQ
ROL — frequently asked questions
Is Rollins, Inc. overvalued?
In our latest published analysis dated 2026-10-12, ROL screens modestly overvalued. The price recorded at analysis is 32,3 USD versus our fair value of 28,9 USD; the high endpoint is presented separately as potential value of 34,0 USD. That implies roughly 10.5% downside to fair value at that date.
Our latest published report, analyzed 2026-10-12, gives ROL a fair value of 28,9 USD and a potential value of 34,0 USD. The conclusion is triangulated across multiple valuation models and weighted by reliability for Rollins, Inc.'s archetype; it is a dated research output, not a live price.
Should I buy ROL now?
Our latest published rating for ROL, analyzed 2026-10-12, is Reduce. Rollins, Inc. screens modestly overvalued at the analysis-date price of 32,3 USD versus fair value of 28,9 USD; potential value is 34,0 USD. This is research for educational purposes, not personalized investment advice.
What are the biggest risks for ROL?
The dedicated bear-case section in our report analyzed 2026-10-12 documents Rollins, Inc.'s material risks, evidence, thresholds, and thesis-invalidation conditions. Scenario-specific explanations remain in that section so the report does not repeat or decontextualize them elsewhere.
What is ROL's rating?
Our latest published rating for ROL, analyzed 2026-10-12, is Reduce, with a published moat assessment of 9/10 (Wide). It reflects our fair value of 28,9 USD, the potential value of 34,0 USD, and the price recorded at analysis (32,3 USD).
Ten raport nie został jeszcze przetłumaczony. Odśwież za kilka minut, gdy kolejka tłumaczeń go przetworzy.
§1 Podsumowanie wykonawczeEN
Odpowiedź w 30 sekundReduce
Cena a wartość
Cena
$32.26
Wartość godziwa
$28.87
Wartość potencjalna
$33.97
Stan na
2026-10-12
Dlaczego to może zadziałać
The biggest upside opportunity lies in rapid reacceleration of Orkin residential inbound leads alongside exceeding management's 30+ bps annual margin expansion target through Wheels fleet optimization and centralized procurement, driving operating margins toward 20.0% and unlocking Potential value of $33.97.
Co zmieniłoby naszą ocenę
Orkin residential organic inbound lead volumes and customer contract additions remain depressed, causing aggregate residential revenue growth to persist below 4.0% YoY in second-half 2026 results.
Rollins Inc. pairs a Wide economic moat in route-based pest management with durable operating cash flows, but current market valuations at an 11.7% premium to Fair value leave investors exposed to multiple compression amid decelerating residential demand and technician healthcare inflation.
Rollins Inc. (NYSE: ROL) demonstrates the quintessential characteristics of a mature compounder: mission-critical non-discretionary services, exceptional customer retention, pricing power, and an asset-light operating model that converts to at over 120%,. The company's dense stop clustering under the Orkin banner drives significant labor productivity advantages that sub-scale competitors cannot match, generating an of 19.30% on $3,761.05M of in FY2025,. Management continues to compound value through programmatic bolt-on acquisitions such as Romex, adding 2% to 3% inorganic to baseline organic expansion.
Despite these structural strengths, recent operating performance reveals emergent vulnerabilities. In Q2 2026, residential volume growth at Orkin dragged aggregate residential growth down to 3.6% as inbound digital search leads softened progressively. Simultaneously, gross margins fell 100 basis points to 52.8% due to rising self-insured technician healthcare claims and vehicle fuel costs,, pulling quarterly incremental margins down to 6.5%. These headwinds demonstrate that Rollins is not immune to labor cost inflation or consumer digital acquisition volatility.5
Valuation synthesis indicates an asymmetric downside profile. At $32.26 per share as of 2026-10-12, Rollins trades at 25.91x forward earnings, representing an 11.72% premium to our compositeFair value of $28.87 (implied return of -10.49%). Across our multi-model valuation framework, which balances multi-stage moat fade ($32.27), forward earnings ($26.52), owner earnings ($31.30), and discounted cash flow ($23.99), the share price as of 2026-10-12 provides no margin of safety against further lead volume deceleration. We therefore issue a Reduce rating.4
Premier Route Density and Scale Advantage
Dense technician routing clustering reduces windshield time per customer stop, driving 19.30% operating margins and industry-leading labor productivity.7
Non-discretionary pest remediation and commercial regulatory compliance generate predictable, recurring revenues with low customer churn.5
Proven Tuck-in M&A Compounding Playbook
Consistent bolt-on acquisition playbook adds 2% to 3% inorganic growth annually to supplement 6%+ organic expansion.5
Rekomendacja domu
We rate Rollins Inc. Reduce with a Fair value of $28.87 per share,. While Rollins is an exceptional business with an enduring Wide economic moat, current valuation multiples (25.91x forward P/E) leave no margin of safety against residential lead generation softness and labor cost inflation. Investors should reduce exposure and wait for multiple compression before re-entering.4
Przegląd spółki
Rollins Inc. is a leading North American provider of essential pest and termite management services to residential and commercial customers. Operating under premier brands including Orkin, HomeTeam Pest Defense, Western Pest Services, and Fox Pest Control, the company delivers non-discretionary recurring services across thousands of daily routes.
The business model is characterized by high customer retention, low capital expenditure requirements (under 1% of sales), and superior route density. The United States represents 92.83% of total revenues ($3,491.33M in FY2025), insulating the core business from international trade friction.
§2 Scenariusz negatywnyEN
Our bear stress test evaluates a severe scenario combining persistent residential inbound lead softness at Orkin, prolonged technician healthcare and wage inflation compressing incremental margins below guided floors, and multiple contraction toward peer multiples of 18.0x to 18.4x. In this environment, organic top-line growth decelerates toward 3.5%, operating margins compress toward 16.5%, and intrinsic valuation contracts to the bear boundary of $24.14, representing a 25.2% decline from the analysis price of $32.26.
The downside scenario captures persistent softness in consumer-initiated search volume at Orkin, accompanied by sustained technician healthcare cost inflation and vehicle fuel headwinds. Under this path, incremental margin flow-through stalls well below management targets and organic residential growth decelerates, leading to valuation multiple compression toward broader consumer cyclical averages. The reader would identify this path through persistent quarterly incremental margin weakness and stagnant residential contract counts.
Jak ta teza może się załamać
Severe Organic Residential Demand Contraction and Orkin Digital Inbound Lead Collapse
Residential pest volume headwinds at Orkin reduced aggregate residential growth to 3.6% in Q2 2026 as inbound digital search leads deteriorated progressively and digital media adjustments failed to stimulate search volume. If sustained over 12 months, this would trigger an estimated -28.5% fair value impact.5
FV impact
-4.4%
Revenue and EPS growth 5 points lower for five years
Trigger
Within 12 months
Sygnały wczesnego ostrzegania do monitorowania
Pięć zdarzeń, które osłabiłyby naszą tezę inwestycyjną.
Rollins Inc. possesses a Wide economic moat anchored by its dense geographic route infrastructure and the century-old brand equity of Orkin. Route density is the paramount determinant of profitability in route-based service operations: higher customer concentration per square mile reduces drive time between stops, maximizes billable technician hours, and lowers fuel and fleet maintenance expenses per customer serviced. In FY2025, this operational leverage generated $726.07M in operating profit on $3,761.05M in revenues, translating to an operating margin of 19.30%,.
The durability of this competitive advantage is further reinforced by high customer switching costs and brand intangibles. Commercial accounts in hospitality, healthcare, and food distribution face rigorous health inspections and legal liability, making service continuity far more important than nominal price concessions. In residential markets, Orkin's multichannel acquisition strategy—spanning digital search, door-to-door sales, and homebuilder partnerships —creates steady customer acquisition pipelines that sub-scale competitors cannot match. Management's ability to flex technician capacity across brand banners like Orkin and Fox helps smooth regional labor bottlenecks.
These structural advantages insulate Rollins from cyclical shocks, as evidenced by FY2025 gross margins of 52.75% ($1,984.04M gross profit). With capital expenditures amounting to less than 1% of revenue ($28.09M in FY2025), the company earns returns on capital that comfortably exceed its computed WACC of 8.0653%, justifying a Wide moat rating with a multi-year excess return duration.
Zysk ekonomiczny
Rollins generates returns on capital well above its computed WACC of 8.0653%, supported by FY2025 operating income of $726.07M on $3,761.05M revenue (19.30% operating margin),. High cash conversion and minimal capital requirements (capex of $28.09M, or 0.75% of sales) sustain persistent economic value creation.2,7
9/ 10
Wide
Sources of advantage
01Route Density and Scale Advantage — Geographic clustering of residential and commercial routes minimizes technician windshield travel time per stop, maximizing labor efficiency and operating margins. Local competitors cannot replicate this stop density without comparable market share.Wide
02Brand Equity and Intangible Assets — Orkin maintains industry-leading name recognition in both residential and commercial sectors, creating premium pricing power and strong spontaneous brand recall that lowers customer acquisition costs relative to sub-scale regional operators.
Znane zagrożenia dla przewagi
Zagrożenie
Powaga
Oś czasu
Złagodzenie
Softening consumer-initiated digital search and inbound call volumes reducing residential volume growth at Orkin.
high
6-12 months
Reallocating marketing expenditures, testing targeted digital channels, and shifting technician capacity toward faster-growing regional brands like Fox,.5
The highlighted cell is Fair value when every assumption sits at its base level ($28.87). Each row and column shows what Fair value becomes when one assumption moves.
Free cash flow to the firm stays positive in the first projected year at $476.2M after modeled reinvestment of $104.5M, with terminal value at 80.8% of enterprise value. A sudden drop in free cash flow is not projected unless capital spending relative to revenue, reinvestment, or gross margin resets materially.
Operating margins expand gradually toward twenty percent through procurement and fleet optimization.
Terminal price-to-earnings multiple experiences modest compression while preserving route density premium.
The base scenario underwrites steady compound growth where residential customer demand stabilizes and Orkin maintains route density advantages. Management executes disciplined tuck-in acquisitions while procurement and fleet routing initiatives under Wheels expand operating margins toward twenty percent. Under these conditions, the base scenario supports a target of $28.87, reflecting an estimated probability of 55.0% and an implied return of -10.5% against $32.26.
Annual operating margin expansion exceeds guided targets through fleet optimization and automated technician routing.
§7 Drzewo decyzyjne wynikówEN
Powyżej
Maintain Reduce; Re-examine technician labor inflation trends and verify whether inbound lead acceleration stems from sustained organic demand rather than elevated promotional spending before considering any allocation adjustment.
Results meeting guided expectations confirm steady route compounding but leave shares vulnerable to valuation multiple compression, as $32.26 trades above $28.87 without expanding incremental margins.
Poniżej
Downgrade the rating; Accelerate portfolio trimming, review branch-level technician retention metrics, and reassess long-term route density defensibility across affected operating markets.
Wyzwalacz: Residential organic revenue growth decelerating further from prior quarters while incremental margins fail to achieve guided floors.
A quarterly miss caused by persistent consumer-initiated lead weakness and unabsorbed technician cost inflation would indicate structural demand elasticity, accelerating valuation multiple contraction toward broader peer levels.
Jakość wyników
Earnings quality remains supported by excellent cash conversion, as recurring customer billings generate operating cash flows that substantially exceed reported net income. Working capital requirements remain minimal due to immediate service payment terms and low inventory requirements. However, quality of incremental margins has deteriorated temporarily due to self-insured medical claim inflation, requiring close inspection of operating expense trends in upcoming quarterly filings.
Dynamika prognoz
Consensus earnings and revenue estimates have remained steady following recent quarterly disclosures. Sell-side analysts have maintained expectations for moderate top-line expansion, reflecting confidence in recurring commercial contracts balanced against documented softness in residential inbound search volume.
BieżącyDecelerated in recent quarters due to softer consumer inbound search volume and digital marketing adjustments.
Dlaczego to ważne
Reacceleration demonstrates that consumer-initiated pest remediation demand is recovering, sustaining top-line expansion and supporting branch technician capacity utilization.
Cash flow generation is exceptionally robust. In FY2025, operating cash flow reached $678.11M, converting 128.74% of net income ($526.71M). Capital expenditures were limited to $28.09M, resulting in $650.02M in free cash flow. This asset-light profile (~0.75% capex-to-revenue) generates ample organic liquidity to self-fund annual tuck-in M&A outlays (modeled at 18% of NOPAT) while sustaining conservative leverage.5,6,7
Rollins generates outstanding returns on invested capital due to high operating margins (19.30% in FY2025) and minimal physical capital requirements. While gross margins softened 100 bps in Q2 2026 on healthcare inflation, long-term ROIC remains securely supported by route density and pricing discipline.
With a computed WACC of 8.0653%, Rollins' return on capital exceeds its cost of capital by more than 1,500 basis points, reflecting substantial ongoing economic profit creation.
Asset-Light Model Delivers Exceptional Free Cash Flow Conversion
Najnowsze wolne przepływy pieniężne650 mln USDFY2025
Dług netto386,1 mln USDFY2025
Struktura rachunku zysków i stratJak skala działalności przekłada się na raportowany zysk.30 cze 2026
StockMarketAgent.AI
Przychody1,1 mld USDKoszt sprzedaży−508,6 mln USDZysk brutto569,9 mln USDKoszty operacyjne−368,6 mln USDZysk operacyjny201,4 mln USDPozycje pozaoperacyjne i podatki−57,4 mln USDZysk netto143,9 mln USD
Dane historii finansowej
Przychody
1 078 576 000 USD
Koszt sprzedaży
508 630 000 USD
Zysk brutto
569 946 000 USD
Koszty operacyjne
368 587 000 USD
Zysk operacyjny
201 359 000 USD
Pozycje pozaoperacyjne i podatki
-57 449 000 USD
Zysk netto
143 910 000 USD
Podsumowanie bilansuJak wykazane aktywa są utrzymywane i finansowane w wybranym okresie.
StockMarketAgent.AI
Struktura aktywówFinansowane przez
Aktywa ogółem3,1 mld USDŚrodki pieniężne100 mln USDAktywa obrotowe472,7 mln USDZobowiązania ogółem1,8 mld USDZobowiązania krótkoterminowe785,5 mln USDKapitał własny1,4 mld USD
Dane podziału bilansu
Aktywa ogółem
3 140 523 000 USD
Środki pieniężne
100 004 000 USD
Aktywa obrotowe
472 682 000 USD
Zobowiązania ogółem
1 766 202 000 USD
Zobowiązania krótkoterminowe
785 525 000 USD
Kapitał własny
1 374 321 000 USD
Most przepływów pieniężnychJak przepływy operacyjne przełożyły się na wolne przepływy pieniężne w FY2025.
StockMarketAgent.AI
Uzgodnienie przepływów operacyjnych
Zysk netto526,7 mln USDAmortyzacja+124,7 mln USDWynagrodzenie w akcjach+39,7 mln USDPozostałe korekty operacyjne−13 mln USDOperacyjne przepływy pieniężne678,1 mln USD
Uzgodnienie środków na początek i koniec
Środki pieniężne na początek89,6 mln USDOperacyjne przepływy pieniężne+678,1 mln USDPrzepływy inwestycyjne−326,7 mln USDPrzepływy finansowe−343,6 mln USDWpływ kursów walutowych+2,5 mln USDŚrodki pieniężne na koniec100 mln USD
678,1 mln USD − 28,1 mln USDWolne przepływy pieniężne 650 mln USD
Dane mostu przepływów pieniężnych
Zysk netto
526 705 000 USD
Wpływy operacyjne
691 156 000 USD
Amortyzacja
124 744 000 USD
Wynagrodzenie w akcjach
39 707 000 USD
Operacyjne przepływy pieniężne
678 107 000 USD
Wydatki operacyjne
13 049 000 USD
Dostępne środki pieniężne
770 282 000 USD
Środki pieniężne na początek
89 630 000 USD
Wpływ kursów walutowych
2 545 000 USD
Wydatki inwestycyjne
326 699 000 USD
Capex
28 086 000 USD
Pozostała działalność inwestycyjna
298 613 000 USD
Wydatki finansowe
343 579 000 USD
Emisja długu netto
209 645 000 USD
Skup akcji
216 855 000 USD
Wypłacone dywidendy
327 901 000 USD
Pozostała działalność finansowa
8 468 000 USD
Środki pieniężne na koniec
100 004 000 USD
Przepływy inwestycyjne
-326 699 000 USD
Przepływy finansowe
-343 579 000 USD
Przychody według regionuUdział w łącznych przychodach za 2025-12-31.
3,8 mld USDŁączne przychody
Przychody według regionuUdział
United States3,5 mld USD92,8%+11,1% r/r
Non Us269,7 mln USD7,2%+9,9% r/r
Źródło: SEC EDGAR · Złożono 2026-02-12 · SEC EDGAR
Dane o strukturze przychodów: Przychody według regionu
Przychody według regionu
Przychody
Udział
r/r
United States
3,5 mld USD
92,8%
11,1%
Non Us
269,7 mln USD
7,2%
9,9%
Przychody i wynikiJak skala działalności przekłada się na raportowany zysk.
Gotówka i zadłużenieDostępna płynność wobec całkowitego zadłużenia.
Generowanie gotówkiPrzepływy operacyjne w porównaniu z wolnymi przepływami pieniężnymi.
RentownośćZmiany marży brutto, operacyjnej i netto.
Dane finansowe na określony moment użyte w analizie z 2026-10-12.
Dane historii finansowej
Okres
Przychody
EBITDA
Zysk netto
Operacyjne przepływy pieniężne
Wolne przepływy pieniężne
Capex
Amortyzacja
Wynagrodzenie w akcjach
Skup akcji
Wypłacone dywidendy
Emisja długu netto
Przepływy inwestycyjne
Przepływy finansowe
Środki pieniężne na początek
Środki pieniężne na koniec
Gotówka i inwestycje
Zadłużenie ogółem
Marża operacyjna
ROIC
WACC
Spread ROIC−WACC
2016-12-31
1,6 mld USD
309,6 mln USD
167,4 mln USD
226,5 mln USD
193,4 mln USD
33,1 mln USD
50,9 mln USD
12,4 mln USD
31,1 mln USD
109 mln USD
—
-76,8 mln USD
-136,4 mln USD
—
142,8 mln USD
142,8 mln USD
—
19,7%
—
—
—
2017-12-31
1,7 mld USD
349,5 mln USD
179,1 mln USD
235,4 mln USD
210,7 mln USD
24,7 mln USD
56,6 mln USD
12,4 mln USD
8,2 mln USD
122 mln USD
—
-154,2 mln USD
-130,3 mln USD
142,8 mln USD
107,1 mln USD
107,1 mln USD
—
20,9%
—
—
—
2018-12-31
1,8 mld USD
374,3 mln USD
231,7 mln USD
299,4 mln USD
272,2 mln USD
27,2 mln USD
66,8 mln USD
13,7 mln USD
9,5 mln USD
152,7 mln USD
—
-101,4 mln USD
-175,4 mln USD
107,1 mln USD
115,5 mln USD
115,5 mln USD
—
20,7%
—
—
—
2019-12-31
2 mld USD
398,5 mln USD
203,3 mln USD
319,6 mln USD
292,4 mln USD
27,1 mln USD
81,1 mln USD
14,2 mln USD
10 mln USD
153,8 mln USD
—
-455,1 mln USD
111,7 mln USD
115,5 mln USD
94,3 mln USD
94,3 mln USD
203 mln USD
15,7%
—
3,7%
—
2020-12-31
2,2 mld USD
455,4 mln USD
266,8 mln USD
435,8 mln USD
412,6 mln USD
23,2 mln USD
88,3 mln USD
20,9 mln USD
8,3 mln USD
160,5 mln USD
—
-162,4 mln USD
-281,3 mln USD
94,3 mln USD
98,5 mln USD
98,5 mln USD
417,1 mln USD
17,4%
—
3,0%
—
2021-12-31
2,4 mld USD
569,9 mln USD
356,6 mln USD
401,8 mln USD
374,6 mln USD
27,2 mln USD
86,6 mln USD
14,9 mln USD
10,7 mln USD
208,7 mln USD
—
-99 mln USD
-290,2 mln USD
98,5 mln USD
105,3 mln USD
117,9 mln USD
402,8 mln USD
18,5%
—
4,0%
—
2022-12-31
2,7 mld USD
592,9 mln USD
368,6 mln USD
465,9 mln USD
435,3 mln USD
30,6 mln USD
91,3 mln USD
21,2 mln USD
7,1 mln USD
211,6 mln USD
-100 mln USD
-134,1 mln USD
-336 mln USD
105,3 mln USD
95,3 mln USD
95,8 mln USD
533,2 mln USD
18,3%
—
6,3%
—
2023-12-31
3,1 mld USD
688,2 mln USD
435 mln USD
528,4 mln USD
495,9 mln USD
32,5 mln USD
99,8 mln USD
24,6 mln USD
315 mln USD
264,3 mln USD
438 mln USD
-372,9 mln USD
-149,4 mln USD
95,3 mln USD
103,8 mln USD
104,8 mln USD
816,3 mln USD
19,0%
—
6,1%
—
2024-12-31
3,4 mld USD
771,1 mln USD
466,4 mln USD
607,7 mln USD
580,1 mln USD
27,6 mln USD
113,2 mln USD
30 mln USD
11,6 mln USD
298 mln USD
-96 mln USD
-176,2 mln USD
-440,7 mln USD
103,8 mln USD
89,6 mln USD
90,6 mln USD
395,3 mln USD
19,4%
—
7,0%
—
2025-12-31
3,8 mld USD
854 mln USD
526,7 mln USD
678,1 mln USD
650 mln USD
28,1 mln USD
124,7 mln USD
39,7 mln USD
216,9 mln USD
327,9 mln USD
209,6 mln USD
-326,7 mln USD
-343,6 mln USD
89,6 mln USD
100 mln USD
100 mln USD
486,1 mln USD
19,3%
—
6,5%
—
§9 Porównanie wyceny z konkurentami
Wartość godziwaReport-date price
Rollins, Inc.ROL
Cena / wartość godziwa
Wartość godziwa28,87 USDReport-date price32,26 USD
Data oceny
Przewaga konkurencyjnaWide
Karta wyników inwestycyjnych66 / 100
Darden Restaurants, Inc.DRI
Cena / wartość godziwa
Wartość godziwa226,51 USDReport-date price198,3 USD
Data oceny
Przewaga konkurencyjnaNarrow
Karta wyników inwestycyjnych61 / 100
Ulta Beauty Inc.ULTA
Cena / wartość godziwa
Wartość godziwa485,87 USDReport-date price545,48 USD
Data oceny
Przewaga konkurencyjnaNarrow
Karta wyników inwestycyjnych66 / 100
Rollins, Inc.ROL
Cena / wartość godziwa
Wartość godziwa28,87 USDReport-date price32,26 USD
Rollins Inc. (ROL) trades at 25.9x forward earnings against a peer median of 14.5x. Its EV/EBITDA of 19.0x compares with a peer median of 12.3x. The comparison uses 4 peers: Deckers Outdoor Corporation, Darden Restaurants Inc., Ulta Beauty Inc. and Ball Corporation, as of 2026-10-11 to 2026-10-12.
§10 Branża i cyklEN
Faza cyklu
Expansion
Third-party industry capex/depreciation benchmarks are unavailable, meaning this capital cycle assessment is demand-led and evidence-limited. Within Rollins' own operations, capital intensity is minimal: FY2025 capex totaled $28.09M against $3,761.05M in revenues (0.75% capex/sales),. Capital allocation is directed primarily into route bolt-on acquisitions rather than heavy fixed assets.7
Cykl byczy
Favorable seasonal weather patterns accelerate insect and rodent reproduction, stimulating organic pest control demand. Commercial hygiene regulations tighten across healthcare and food manufacturing, while residential homeowners prioritize property preservation. Route density gains and fleet automation drive operating margins toward 20% as pricing power easily offsets wage inflation.
Cykl niedźwiedzi
A downturn in residential real estate transactions combined with consumer discretionary spending scrutiny leads households to defer preventative pest remediation or lengthen service intervals. At the same time, technician wage pressures and self-insured healthcare claims elevate branch operating costs, depressing incremental margins below 10% and stalling multiple expansion.
Trendy długoterminowe
Trend
Wpływ
Uwaga
Heightened Commercial Hygiene and Regulatory Compliance Standards
positive
Stringent public health, sanitation, and food safety standards mandate continuous preventative pest control across commercial hospitality, dining, logistics, and medical facilities, guaranteeing resilient non-discretionary baseline demand.
Digital Inbound Lead Migration and Omnichannel Customer Acquisition
neutral
Consumers increasingly rely on mobile search and digital platforms to book immediate pest control services, altering traditional acquisition channels and requiring sustained investment in digital media and search engine visibility.
Pozycjonowanie
Rollins occupies the market-leading position in North American pest control alongside its Orkin flagship brand. The company generates 92.83% of its revenues within the United States ($3,491.33M in FY2025), completely insulating core operations from cross-border tariff disputes, foreign exchange volatility, and international supply chain friction. Management's multi-brand architecture enables flexible labor reallocation between brands like Orkin and Fox to bypass regional supply bottlenecks.5,8
§11 Zarządzanie pozycjąEN
Wielkość pozycji
0-1%
High conviction in our Reduce rating reflects the combination of an 11.72% valuation premium to Fair value ($28.87), Orkin residential digital search deterioration, and depressed incremental margins of 6.5%. Portfolio exposure should be trimmed to an underweight stance.5
Ryzyko
Risk management for Rollins centers on disciplined exposure limits and recognizing multiple compression risks. While bankruptcy or severe financial distress risk is negligible given low debt ($1.12B) and strong cash flow conversion, valuation risk is elevated. Investors holding Rollins should harvest gains, set protective trailing stops, and avoid new allocations until share prices realign with intrinsic earnings power.
With an implied return of -10.49% to Fair value of $28.87 and forward P/E of 25.91x, total return prospects are unattractive compared to historical compounder benchmarks.4
Income / Defensive Compounder Investor
Hold
Long-term compounder investors may hold core positions given Rollins' Wide economic moat and reliable cash flow conversion, but should harvest gains and refrain from reinvesting dividends at current premium prices.
Value / Margin of Safety Investor
Avoid
§14 Końcowa rekomendacjaEN
Działanie
Redukuj
We recommend investors Reduce exposure to Rollins Inc. (NYSE: ROL) with a Fair value of $28.87 per share. At the analysis price of $32.26, shares trade at an 11.72% premium to intrinsic value with an implied return of -10.49%.4
While Rollins possesses a Wide economic moat anchored by unmatched Orkin route density, slowing residential inbound search demand and technician healthcare cost inflation present material downside risks that are not compensated at 25.91x forward earnings.
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Sources
The records this analysis drew on, as they stood when it was run.
Analyst consensusData as of 2026-10-12 · Published 2026-10-12 · Provider-adjusted · cited for 1 figure
Not every cited input appears here: internal calculations and intermediate model outputs have no external record, and some citations could not be matched to one.
Technician Labor and Self-Insured Healthcare Cost Inflation Compressing Margins
Gross margins fell 100 bps to 52.8% in Q2 2026 driven by softer volume, technician healthcare claims inflation, and vehicle fuel headwinds,, pulling incremental margins down to 6.5%. Operating margin falling below 16.5% over 18 months implies an estimated -22.4% fair value impact.5
FV impact
-1.9%
Operating margin 3 points lower throughout
Trigger
Within 18 months
Cyclical Valuation Multiple De-rating on Slower Growth and Margin Ceiling
Rollins trades at 25.91x forward P/E and a PEG of 2.57x, well above consumer peer forward P/E multiples of 13.1x to 17.3x (BALL at 13.12x, DRI at 15.94x, ULTA at 17.34x),,. Multiple compression toward 18.4x over 24 months represents an estimated -18.6% fair value impact.3,4
FV impact
-6.4%
Terminal multiple 20% lower
Trigger
Within 24 months
Signals severe operating deleverage where technician healthcare costs and fuel expenses outpace revenue gains, falsifying margin expansion toward 20%.
A slowdown in M&A contribution below 1.5% indicates pipeline exhaustion or integration friction following deals like Romex, undermining top-line compounding.
03Customer Switching Costs and Contract Stickiness — Pest prevention and asset protection are non-discretionary recurring services. Regulatory compliance in commercial facilities and biological risk in residential homes generate contract stickiness and high retention rates, insulating revenues from localized price competition.Moderate
Promoting employee utilization of lower-cost healthcare options such as telehealth and on-site clinics, alongside retention programs to curb rehiring expenses,.5
Overpaying for regional bolt-on acquisitions or experiencing post-merger technician and customer attrition.
low
24-36 months
Strict acquisition underwriting discipline focusing on established proprietary local route density and high customer retention, as demonstrated by the Romex transaction.5
52,8%
Method
Project EPS through the explicit advantage period, fade growth as competition catches up, and discount the full stream at cost of equity.
Discounted forecast-period cash flows (4,76 USD) plus discounted terminal value (20,03 USD) minus signed per current share (0,80 USD) equals the 23,99 USD lens value shown above. Negative net debt is , so subtracting it raises value.
Project revenue, apply a terminal EV/revenue multiple, discount enterprise value, subtract net debt, and divide by diluted shares.
How this lens was calculated
Inputs used in this report
Valuation multiples expand as premium route compounder status is reinforced across service markets.
The bull scenario envisions an accelerated rebound in Orkin residential inbound digital search, robust commercial contract expansion, and rapid operational integration of tuck-in acquisitions like Romex. Fleet management savings under Wheels and centralized procurement exceed expectations, driving accelerated operating margin expansion and double-digit diluted earnings compounding. This optimistic path yields a target of $33.97, carrying an estimated probability of 20.0% and an implied return of 5.3% relative to $32.26.
Pressured in the latest quarter by higher people-related expenses, medical claims, and fuel headwinds.
Dlaczego to ważne
Measures how effectively incremental revenue converts into operating earnings, reflecting whether fleet efficiency and procurement savings offset labor cost inflation.
03
Wskaźnik:
Orkin Digital Search and Inbound Lead Volume
BieżącyManagement noted progressive softening throughout the second quarter despite testing adjustments across digital marketing channels.
Dlaczego to ważne
Inbound digital demand drives high-margin one-time and new recurring residential accounts; persistent weakness impairs technician route density.
04
Wskaźnik:
Self-Insured Employee Healthcare and Medical Claims
BieżącyElevated claims inflation created significant gross margin contraction in recent quarters.
Dlaczego to ważne
Elevated healthcare expense directly inflates cost of services, depressing gross margins and restricting operating profit conversion.
05
Wskaźnik:
Tuck-in Acquisition Revenue Contribution and Pipeline
BieżącyActive pipeline supported by recent transactions including Romex performing in line with acquisition expectations.
Dlaczego to ważne
Disciplined acquisitions provide critical inorganic top-line growth and expand geographic route clustering without straining internal technician capacity.
Rollins maintains a disciplined, shareholder-friendly capital allocation strategy focused on high-return reinvestment. The primary capital priority is programmatic tuck-in M&A, where management acquires local pest control operators (such as Romex) at accretive multiples to immediately enhance route density. The balance sheet remains highly conservative, with total debt of $1,115.30M against a market capitalization of $15,519.35M (debt weight 6.70%). Excess cash flow is returned to shareholders via consistent quarterly dividends ($0.73 per share base) and opportunistic repurchases to offset equity compensation dilution.
High cash conversion guarantees that bolt-on acquisitions and dividend payments are internally financed without increasing financial leverage.
Technician Healthcare and Fuel Pressures Impair Incremental Flow-Through
Q2 2026 gross margins fell 100 bps to 52.8% due to medical claims and incremental margins dropped to 6.5%.
Operating leverage will remain constrained until fleet efficiencies under the Wheels agreement and medical expense mitigation take full effect,.
Substantial Multiple Premium Over Cyclical Consumer Peers
Rollins trades at 25.91x forward P/E, compared to peer multiples of 13.12x for BALL, 15.94x for DRI, and 17.34x for ULTA.
The market prices Rollins at a substantial compounder premium, making the stock highly sensitive to any persistent slowdown in organic growth.
Ball CorporationBALL
Cena / wartość godziwa
Wartość godziwa66,71 USDReport-date price59,32 USD
Data oceny
Przewaga konkurencyjnaNarrow
Karta wyników inwestycyjnych68 / 100
Marża
ROL
Rollins Inc.
$15.5B
25.9x
4.0x
19.0x
37.0%
—
DECK
Deckers Outdoor Corporation
$11.3B
10.0x
2.0x
7.6x
42.6%
15.2%
DRI
Darden Restaurants Inc.
$22.4B
15.9x
1.7x
14.5x
55.4%
9.9%
ULTA
Ulta Beauty Inc.
$23.8B
17.3x
1.8x
13.8x
46.1%
12.5%
BALL
Ball Corporation
$15.8B
13.1x
1.1x
10.9x
17.2%
9.2%
Structural Consolidation of Fragmented Route-Based Operators
positive
The North American pest control industry remains fragmented across thousands of independent mom-and-pop operators, providing a long runway for scaled consolidators to acquire local routes at attractive multiples and fold them into dense branch networks,.
