Last Update 15 Dec 25

Fair value Increased 14%

ROL: Rich Multiple Will Face Test As Growth Expectations Remain Elevated

Analysts have raised their fair value estimate for Rollins to $50.00 from $44.00, citing resilient, largely recurring pest control revenues, stronger margins, and a long runway for sustained growth that supports higher future valuation multiples.

Analyst Commentary

Recent Street research has reinforced the constructive long term outlook for Rollins, with major firms highlighting the durability of its recurring revenue base, consistent execution, and sizable opportunity to consolidate a fragmented, under penetrated pest control market.

Goldman Sachs noted that Rollins delivered another quarter of healthy outperformance, with revenue, EBITDA margins, and EPS all exceeding expectations. The firm emphasized that the company is benefiting from the essential nature of pest control services, which helps insulate demand through economic cycles. Internal initiatives around pricing, routing, and sales productivity continue to support margin expansion.

JPMorgan initiated coverage with an Overweight rating and a price target implying meaningful upside from current levels. Its research pointed to Rollins' industry leading share in a roughly $20B U.S. pest control market that still offers room for higher penetration, as well as the contribution of recurring service contracts, which account for roughly 80 percent of revenue and underpin visibility into cash flows and earnings growth.

Across the Street, analysts generally agree that the combination of resilient recurring revenue, disciplined capital allocation, and a long runway for both organic and acquisition driven growth can justify above market valuation multiples, provided Rollins continues to execute on expansion initiatives and maintain strong unit level economics.

Bearish Takeaways

Bearish analysts caution that valuation already embeds optimistic assumptions for long term growth and margin expansion, leaving limited room for multiple expansion if execution or industry growth slows.
Some highlight execution risk around integrating acquired businesses and sustaining high service quality at scale, which could pressure margins and return on invested capital if not managed carefully.
There is concern that a normalization in demand or increased competitive intensity could temper Rollins' pricing power, weighing on revenue growth and challenging the durability of current earnings trajectories.
A subset of cautious views points to the possibility that macro or regulatory changes affecting labor, chemicals, or environmental compliance could raise operating costs, squeezing profitability and testing premium valuation levels.

What's in the News

Completed a $1 billion follow on common stock offering of 17,391,305 shares at $57.50 per share, slightly below the indicated $58.56 range, with a $0.57 per share discount to the offering price (Follow on Equity Offering).
The board authorized a new $200 million share repurchase program tied to the follow on offering, targeting 3,478,260 shares, or 0.72 percent of outstanding stock, to be bought from the underwriter using cash on hand and commercial paper borrowings (Buyback Transaction Announcement).
From November 10 to November 12, 2025, Rollins completed the authorized $200 million repurchase, buying 3,478,260 shares at $57.50 per share, which will be held as treasury shares or cancelled (Buyback Tranche Update).
Declared an 11 percent year over year increase in the regular quarterly cash dividend to $0.1825 per share, payable December 10, 2025 to shareholders of record on November 10, 2025 (Dividend Increase).
Management reiterated an active acquisition strategy, citing a full pipeline of potential deals across core geographies in North America and emphasizing that Rollins does not compete on price when pursuing M&A (Seeking Acquisitions/Investments).

Valuation Changes

The fair value estimate has risen moderately to $50.00 from $44.00, reflecting a higher implied long-term earnings and cash flow outlook.
The discount rate has increased slightly to approximately 6.97 percent from about 6.88 percent, incorporating a marginally higher required return.
Revenue growth has edged down fractionally to roughly 8.09 percent from about 8.10 percent, indicating an essentially unchanged top-line growth outlook.
Net profit margin has improved modestly to around 15.40 percent from approximately 15.07 percent, signaling slightly better expected profitability.
The future P/E multiple has risen meaningfully to about 41.5x from roughly 38.3x, indicating a higher valuation being assigned to forward earnings.

Growing regulatory pressure and ESG expectations are raising costs, squeezing margins, and requiring Rollins to invest in alternative pest control solutions.
Technological disruption and intensified competition from new entrants and private equity are threatening Rollins' traditional revenue base and slowing long-term growth prospects.
Strong operational execution, recurring revenue growth, successful acquisitions, and strategic investments are enhancing Rollins' market position, revenue stability, profitability, and shareholder value.

Catalysts

About Rollins

Through its subsidiaries, provides pest and wildlife control services to residential and commercial customers in the United States and internationally.What are the underlying business or industry changes driving this perspective?

Mounting regulatory scrutiny and restrictions on chemical pesticide use, particularly in key states and countries, are expected to raise compliance costs and force Rollins to adapt its service offerings, which will constrain net margins and impede long-term earnings growth.
Accelerating adoption of smart-home and AI-driven pest monitoring technology threatens to erode demand for traditional pest control, leading to intensifying competition from non-traditional and DIY providers and risks diminishing Rollins' core recurring revenue base over time.
Rollins' heavy reliance on acquisition-driven growth, alongside a potentially saturated North American market and only modest international expansion, increases the risk of inefficient integrations, operational disruptions, and flattening long-term revenue growth.
Consolidation across the pest control industry is drawing increased private equity–backed competition, resulting in greater pricing pressure and higher acquisition multiples, which is likely to compress net margins and slow future earnings accretion.
Heightened focus on environmental sustainability and ESG by commercial customers and investors could shift demand away from chemical-intensive services, forcing Rollins to invest substantially in alternative methods, thereby raising costs and limiting the company's ability to sustain profit growth.

Rollins Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

This narrative explores a more pessimistic perspective on Rollins compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts.
The bearish analysts are assuming Rollins's revenue will grow by 8.1% annually over the next 3 years.
The bearish analysts assume that profit margins will increase from 13.7% today to 15.1% in 3 years time.
The bearish analysts expect earnings to reach $679.8 million (and earnings per share of $1.36) by about September 2028, up from $489.3 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 38.3x on those 2028 earnings, down from 55.8x today. This future PE is greater than the current PE for the US Commercial Services industry at 25.7x.
Analysts expect the number of shares outstanding to grow by 0.07% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.88%, as per the Simply Wall St company report.

Rollins Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The continued double-digit organic and acquired revenue growth across all major service lines, including residential, commercial, and ancillary services, as well as strong year-over-year margin and cash flow expansion, reflects resilient demand and strong execution which could support rising revenue and long-term earnings growth.
Growth in recurring revenue, particularly within Orkin's commercial pest control division, has resulted in high customer retention and attractive lifetime customer value, increasing the predictability and stability of Rollins' revenue stream and supporting future net income.
Ongoing successful integration of strategic acquisitions like Saela and Fox, which are delivering accretive margins and strong cash flow, highlight Rollins' ability to leverage a roll-up strategy to expand its market presence, giving upside potential to both revenue growth and margin improvement.
Investments in sales, marketing, staffing, and operational efficiency-including digital marketing and portfolio diversification-are driving higher quality lead conversion, improved productivity, and cost leverage efforts, all of which can enhance operating margins and earnings.
Robust balance sheet with low leverage and strong free cash flow growth, alongside a sustainable and growing dividend, equip Rollins to allocate capital flexibly for further M&A, operational investments, or shareholder returns, thereby supporting future earnings per share and total shareholder returns.

Valuation

How have all the factors above been brought together to estimate a fair value?

The assumed bearish price target for Rollins is $44.0, which represents the lowest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Rollins's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $72.0, and the most bearish reporting a price target of just $44.0.
In order for you to agree with the bearish analysts, you'd need to believe that by 2028, revenues will be $4.5 billion, earnings will come to $679.8 million, and it would be trading on a PE ratio of 38.3x, assuming you use a discount rate of 6.9%.
Given the current share price of $56.37, the bearish analyst price target of $44.0 is 28.1% lower. Despite analysts expecting the underlying buisness to improve, they seem to believe the market's expectations are too high.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystLowTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystLowTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystLowTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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