LSE:RTO

Stock Analysis Report

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Executive Summary

Rentokil Initial plc, through its subsidiaries, provides route-based services in North America, the United Kingdom, rest of Europe, Asia, the Pacific, and internationally. More Details


Snowflake Analysis

Excellent balance sheet with limited growth.


Similar Companies

Share Price & News

How has Rentokil Initial's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: RTO is less volatile than 75% of UK stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: RTO's weekly volatility (4%) has been stable over the past year.


Market Performance


7 Day Return

-3.4%

RTO

0.4%

GB Commercial Services

-0.7%

GB Market


1 Year Return

12.3%

RTO

-10.6%

GB Commercial Services

-10.2%

GB Market

Return vs Industry: RTO exceeded the UK Commercial Services industry which returned -8.8% over the past year.

Return vs Market: RTO exceeded the UK Market which returned -9.6% over the past year.


Shareholder returns

RTOIndustryMarket
7 Day-3.4%0.4%-0.7%
30 Day-8.9%2.6%8.1%
90 Day-6.2%4.0%5.9%
1 Year12.3%12.3%-7.6%-10.6%-6.6%-10.2%
3 Year56.9%52.9%0.2%-9.9%0.5%-11.8%
5 Year234.2%216.2%22.4%-0.5%25.3%-3.1%

Long-Term Price Volatility Vs. Market

How volatile is Rentokil Initial's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Rentokil Initial undervalued compared to its fair value and its price relative to the market?

38.46x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: RTO (£5.05) is trading above our estimate of fair value (£2.21)

Significantly Below Fair Value: RTO is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: RTO is good value based on its PE Ratio (38.5x) compared to the GB Commercial Services industry average (39.6x).

PE vs Market: RTO is poor value based on its PE Ratio (38.5x) compared to the UK market (20.4x).


Price to Earnings Growth Ratio

PEG Ratio: RTO is poor value based on its PEG Ratio (2.2x)


Price to Book Ratio

PB vs Industry: RTO is overvalued based on its PB Ratio (8.7x) compared to the GB Commercial Services industry average (1.8x).


Next Steps

Future Growth

How is Rentokil Initial forecast to perform in the next 1 to 3 years based on estimates from 15 analysts?

17.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: RTO's forecast earnings growth (17.8% per year) is above the savings rate (1.2%).

Earnings vs Market: RTO's earnings (17.8% per year) are forecast to grow slower than the UK market (27.9% per year).

High Growth Earnings: RTO's earnings are forecast to grow, but not significantly.

Revenue vs Market: RTO's revenue (5.3% per year) is forecast to grow slower than the UK market (7.1% per year).

High Growth Revenue: RTO's revenue (5.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: RTO's Return on Equity is forecast to be high in 3 years time (21.8%)


Next Steps

Past Performance

How has Rentokil Initial performed over the past 5 years?

-5.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: RTO has a large one-off gain of £69.3M impacting its June 30 2020 financial results.

Growing Profit Margin: RTO became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: RTO's earnings have declined by 5.5% per year over the past 5 years.

Accelerating Growth: RTO has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: RTO has become profitable in the last year, making it difficult to compare its past year earnings growth to the Commercial Services industry (-10%).


Return on Equity

High ROE: Whilst RTO's Return on Equity (22.63%) is high, this metric is skewed due to their high level of debt.


Next Steps

  • Explore strong past performing companies in the Commercial Services industry.

Financial Health

How is Rentokil Initial's financial position?


Financial Position Analysis

Short Term Liabilities: RTO's short term assets (£1.7B) exceed its short term liabilities (£1.6B).

Long Term Liabilities: RTO's short term assets (£1.7B) exceed its long term liabilities (£1.6B).


Debt to Equity History and Analysis

Debt Level: RTO's debt to equity ratio (167.5%) is considered high.

Reducing Debt: RTO's debt to equity ratio has reduced from 673.9% to 167.5% over the past 5 years.

Debt Coverage: RTO's debt is well covered by operating cash flow (28.5%).

Interest Coverage: RTO's interest payments on its debt are well covered by EBIT (7.9x coverage).


Balance Sheet


Next Steps

Dividend

What is Rentokil Initial current dividend yield, its reliability and sustainability?

1.01%

Forecast Dividend Yield


Dividend Yield vs Market

Notable Dividend: Unable to evaluate RTO's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate RTO's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if RTO's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if RTO's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: RTO is not paying a notable dividend for the UK market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of RTO's dividend in 3 years as they are not forecast to pay a notable one for the UK market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

4.8yrs

Average management tenure


CEO

Andy Ransom (57 yo)

7.08yrs

Tenure

UK£4,557,700

Compensation

Mr. Andrew M. Ransom, also known as Andy, has been the Chief Executive Officer of Rentokil Initial plc since October 1, 2013. Mr. Ransom serves as Non-Executive Director and Senior Independent Director of ...


CEO Compensation Analysis

Compensation vs Market: Andy's total compensation ($USD6.06M) is above average for companies of similar size in the UK market ($USD4.32M).

Compensation vs Earnings: Andy's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Andrew Ransom
CEO & Executive Director7.08yrsUK£4.56m0.085%
£ 7.9m
Stuart Ingall-Tombs
CFO & Director0.25yrno datano data
Mark Purcell
Chief Information Officer1.58yrsno datano data
Katharine Rycroft
Head of Investor Relationsno datano datano data
Daragh P. Fagan
Group General Counsel & Company Secretary7.17yrsno datano data
Malcolm Padley
Director of Corporate Communications14.83yrsno datano data
Gary Booker
Chief Marketing2.83yrsno datano data
Vanessa Evans
Group Human Resources Director4.83yrsno datano data
John Myers
Managing Director of North America7.08yrsno datano data
Phill Wood
Managing Director of UK & Rest of World7.08yrsno datano data
Paul Cochrane
Managing Director of Asia4.67yrsno datano data
Alain Moffroid
Managing Director of Europe4.67yrsno datano data

4.8yrs

Average Tenure

54yo

Average Age

Experienced Management: RTO's management team is considered experienced (4.8 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Andrew Ransom
CEO & Executive Director7.08yrsUK£4.56m0.085%
£ 7.9m
Stuart Ingall-Tombs
CFO & Director0.25yrno datano data
Ian Harley
Chairman of Rentokil Initial Pension Trustee Limited13.33yrsUK£30.00kno data
Catherine Turner
Non-Executive Director0.58yrno data0.00083%
£ 77.3k
Richard Solomons
Non Executive Chairman1.5yrsUK£254.30k0.0014%
£ 125.8k
Julie Southern
Non-Executive Independent Director6.33yrsUK£75.00k0.00054%
£ 50.3k
Linda Yueh
Non-Executive Independent Director3yrsUK£60.00k0.000090%
£ 8.4k
Angela Seymour-Jackson
Non-Executive Independent Director8.67yrsUK£69.70k0.00057%
£ 53.1k
John Pettigrew
Senior Independent Director1.5yrsUK£66.90k0.00054%
£ 50.3k

3.0yrs

Average Tenure

57yo

Average Age

Experienced Board: RTO's board of directors are considered experienced (3 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Rentokil Initial plc's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Rentokil Initial plc
  • Ticker: RTO
  • Exchange: LSE
  • Founded: 1903
  • Industry: Environmental and Facilities Services
  • Sector: Commercial Services
  • Market Cap: UK£9.318b
  • Shares outstanding: 1.85b
  • Website: https://www.rentokil-initial.com

Number of Employees


Location

  • Rentokil Initial plc
  • Riverbank
  • Meadows Business Park
  • Camberley
  • Surrey
  • GU17 9AB
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
RTOLSE (London Stock Exchange)YesOrdinary SharesGBGBPMay 1992
RKLI.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDMay 1992
RTO1DB (Deutsche Boerse AG)YesOrdinary SharesDEEURMay 1992
RTOLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPMay 1992
RTOK.YOTCPK (Pink Sheets LLC)SPONSORED ADRUSUSDSep 1995

Biography

Rentokil Initial plc, through its subsidiaries, provides route-based services in North America, the United Kingdom, rest of Europe, Asia, the Pacific, and internationally. It offers a range of pest control...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/11/23 21:24
End of Day Share Price2020/11/23 00:00
Earnings2020/06/30
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.