Rollins, Inc. (NYSE:ROL) Q2 2024 Earnings Overview
- Rollins, Inc. (NYSE:ROL) reported **EPS of $0.2671** and **revenue of $891.92 million**, slightly below analyst expectations.
- The company demonstrated consistent growth with revenue increasing from the previous year and matched the Zacks Consensus Estimate for EPS.
- Despite a high P/E ratio of **52.54**, Rollins maintains a solid market position with a focus on organic growth and strategic acquisitions.
Rollins, Inc. (NYSE:ROL), a leading company in the pest and termite control industry, announced its second-quarter earnings for 2024 on Wednesday, July 24, after the market closed. Operating well-known brands such as Orkin, the company disclosed an earnings per share (EPS) of $0.2671, just below the estimated $0.27, and a revenue of $891.92 million, narrowly missing the forecast of $895.02 million. This performance indicates a steady growth path, albeit with minor deviations from analyst expectations.
The reported earnings were in line with the Zacks Consensus Estimate of $0.27 per share, marking an improvement from the previous year's earnings of $0.23 per share. This consistency in meeting earnings estimates, coupled with a revenue increase from $820.75 million in the same quarter the previous year to approximately $891.9 million, underscores Rollins' solid position in the market. The company's ability to maintain revenue growth, with a slight beat of 0.13% against the Zacks Consensus Estimate, highlights its steady performance in the Building Products - Maintenance Service industry.
Jerry Gahlhoff, Jr., President and CEO of Rollins, attributed the company's strong performance to organic growth of 7.7 percent and an improving margin profile. He emphasized the strong demand for Rollins' services and a robust pipeline for acquisitions, expressing confidence in the company's trajectory for the remainder of 2024. This focus on continuous improvement and profitability enhancement, along with the team's contributions, has been pivotal in driving the company's success.
Financially, Rollins is trading with a price-to-earnings (P/E) ratio of approximately 52.54, indicating a higher valuation compared to the industry average. The company's premium valuation is further reflected in its price-to-sales (P/S) ratio of about 7.48 and an enterprise value to sales (EV/Sales) ratio of roughly 7.71. Despite potential liquidity challenges, as indicated by a current ratio of approximately 0.78, Rollins' moderate level of debt relative to equity, with a debt-to-equity (D/E) ratio of about 0.71, suggests a balanced approach to financing its operations.
In summary, Rollins, Inc.'s financial results for the second quarter of 2024 demonstrate its ability to sustain growth and meet market expectations, despite slight misses in earnings and revenue forecasts. The company's strategic focus on organic growth, profitability, and acquisitions positions it well for continued success in the competitive pest control industry.
| Symbol | Price | %chg |
|---|---|---|
| 2305.T | 2094 | 0 |
| ROL | 48.43 | 0.01 |
| 6071.T | 618 | 0 |
| 212A.T | 1465 | 0 |
Rollins Shares Up 5% Since Q1 Earnings Beat
Rollins (NYSE:ROL) shares rose nearly 5% since the company reported its Q1 earnings results on Wednesday, with EPS of $0.18 coming in better than the Street estimate of $0.17. Revenue was $658 million, beating the Street estimate of $641.47 million.
In contrast to concerns around growth slowing down, the company delivered further acceleration in organic growth to 9.2%, driven by broad-based momentum across all segments.
Adjusted EBITDA margin of 21.1% grew by approximately 130bps year-over-year highlighting robust revenue, pricing actions, and solid execution.
Analysts at RBC Capital expect the company to use its strong free cash flow and under-levered balance sheet to pursue bolt-on acquisitions over transformational M&A until the Fox integration is complete.
Rollins’ Fiscal 2023 Outlook
RBC Capital provided its outlook on Rollins, Inc. (NYSE:ROL), noting the company sets up well going into 2023, given the recession-resilient business model, while expanded upsell/cross-sell opportunities, sustained share gains through solid execution, and improved retention should drive above-industry growth.
The analysts expect organic growth momentum to sustain in 2023, modeling approximately 8% total organic growth composed of 7% Residential, 9% Commercial, and 10% Termite.
According to the analysts, technology adoption should drive improved technician efficiency and customer experience. They expect pricing increases to normalize (1-2% realization) in fiscal 2023. The analysts estimate operating leverage, improved efficiency, and inflationary pressures rolling over to deliver over 35% incremental margins driving approximately 130bps of 2023 EBITDA margin expansion.
Rollins’ Upcoming Q3 Earnings Preview
Analysts at RBC Capital provided their outlook on Rollins, Inc. (NYSE:ROL) ahead of the upcoming Q3 earnings announcement.
The analysts believe organic growth momentum will sustain in Q3 and model 6.6% total organic growth composed of 6.5% Residential, 6.9% Commercial, and 6.7% Termite. That said, Q3 growth is likely to slow sequentially given the tough comp (approximately 9% organic) but the analysts expect re-acceleration in Q4 to 6.9% and 7.0% in 2023 as comps gradually ease as well as pricing and expansion of the commercial sales, which bodes well for growth.
Furthermore, the analysts believe inflationary pressures, namely fuel, and M&S will continue to roll over, which should drive margin expansion starting Q4. There should also be potential for accelerated accretive M&A given the roughly net cash position and favorable backdrop post RTO/TMX deal close.
Rollins’ Upcoming Q3 Earnings Preview
Analysts at RBC Capital provided their outlook on Rollins, Inc. (NYSE:ROL) ahead of the upcoming Q3 earnings announcement.
The analysts believe organic growth momentum will sustain in Q3 and model 6.6% total organic growth composed of 6.5% Residential, 6.9% Commercial, and 6.7% Termite. That said, Q3 growth is likely to slow sequentially given the tough comp (approximately 9% organic) but the analysts expect re-acceleration in Q4 to 6.9% and 7.0% in 2023 as comps gradually ease as well as pricing and expansion of the commercial sales, which bodes well for growth.
Furthermore, the analysts believe inflationary pressures, namely fuel, and M&S will continue to roll over, which should drive margin expansion starting Q4. There should also be potential for accelerated accretive M&A given the roughly net cash position and favorable backdrop post RTO/TMX deal close.
Rollins Upgraded to Outperform at RBC Capital
Analysts at RBC Capital upgraded Rollins, Inc. (NYSE:ROL) to outperform from sector perform, noting that aggressive pricing, strong advertising push, and expanded cross-selling opportunities given fully- staffed technician levels, along with secular trends, namely warmer weather, greater outsourcing propensity, and migration to warmer/ wetter states, should drive robust revenue growth.
According to the analysts, inflationary pressures (fuel, M&S, tight labor market) rolling over, along with the BOSS digitalization initiative driving improved route density and normalization of H2/22 advertising spending, should drive margin expansion starting Q4/22. Additionally, there is potential for accelerated accretive M&A given the roughly net cash position.
Rollins Upgraded to Outperform at RBC Capital
RBC Capital analysts upgraded Rollins, Inc. (NYSE:ROL) to outperform from sector perform, highlighting that Q2/22 had only a partial benefit from pricing and sales momentum and could see the full benefit in Q3/22.
According to the analysts, aggressive pricing, strong advertising push, and expanded cross-selling opportunities given fully-staffed technician levels, along with secular trends, and greater outsourcing propensity, should drive robust revenue growth.
Furthermore, inflationary pressures (fuel, M&S, tight labor market) rolling over, along with the BOSS digitalization initiative driving improved route density and normalization of H2/22 advertising spending, should drive margin expansion starting Q4/22.
