LSE:RTO

Stock Analysis Report

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.


Snowflake Analysis

High growth potential with imperfect balance sheet.


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 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

0.2%

RTO

-6.2%

GB Commercial Services

-8.6%

GB Market


1 Year Return

43.6%

RTO

15.0%

GB Commercial Services

-1.3%

GB Market

Return vs Industry: RTO exceeded the UK Commercial Services industry which returned 15% over the past year.

Return vs Market: RTO exceeded the UK Market which returned -1.3% over the past year.


Shareholder returns

RTOIndustryMarket
7 Day0.2%-6.2%-8.6%
30 Day6.0%-6.9%-8.4%
90 Day13.3%-2.2%-5.3%
1 Year45.3%43.6%18.4%15.0%4.0%-1.3%
3 Year113.4%105.1%16.8%6.7%7.6%-6.1%
5 Year293.4%265.2%25.9%5.6%23.4%-4.8%

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?

10.84x

Price to Book (PB) ratio


Share Price vs. Fair Value

Below Fair Value: RTO (£5.04) is trading above our estimate of fair value (£4.44)

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


Price To Earnings Ratio

PE vs Industry: RTO is unprofitable, so we can't compare its PE Ratio to the Commercial Services industry average.

PE vs Market: RTO is unprofitable, so we can't compare its PE Ratio to the UK market.


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate RTO's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: RTO is overvalued based on its PB Ratio (10.8x) compared to the GB Commercial Services industry average (2x).


Next Steps

Future Growth

How is Rentokil Initial forecast to perform in the next 1 to 3 years based on estimates from 12 analysts?

11.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: RTO is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (0.5%).

Earnings vs Market: RTO is forecast to become profitable over the next 3 years, which is considered above average market growth.

High Growth Earnings: RTO's is expected to become profitable in the next 3 years.

Revenue vs Market: RTO's revenue (4.9% per year) is forecast to grow faster than the UK market (3.8% per year).

High Growth Revenue: RTO's revenue (4.9% 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 (20.8%)


Next Steps

Past Performance

How has Rentokil Initial performed over the past 5 years?

2.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: RTO is currently unprofitable.

Growing Profit Margin: RTO is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: RTO is unprofitable, but has reduced losses over the past 5 years at a rate of 2.2% per year.

Accelerating Growth: Unable to compare RTO's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: RTO is unprofitable, making it difficult to compare its past year earnings growth to the Commercial Services industry (13.8%).


Return on Equity

High ROE: RTO has a negative Return on Equity (-11.25%), as it is currently unprofitable.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Rentokil Initial's financial position?


Financial Position Analysis

Short Term Liabilities: RTO's short term assets (£1.1B) do not cover its short term liabilities (£1.4B).

Long Term Liabilities: RTO's short term assets (£1.1B) do not cover its long term liabilities (£1.5B).


Debt to Equity History and Analysis

Debt Level: RTO's debt to equity ratio (192.7%) is considered high.

Reducing Debt: RTO had negative shareholder equity 5 years ago, but is now positive and has therefore improved.


Balance Sheet

Inventory Level: RTO has a low level of unsold assets or inventory.

Debt Coverage by Assets: RTO's debt is not covered by short term assets (assets are 0.7x debt).


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: RTO has been profitable on average in the past, therefore cash runway is not a concern.

Forecast Cash Runway: RTO has been profitable on average in the past, therefore cash runway is not a concern.


Next Steps

Dividend

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

0.89%

Current Dividend Yield


Dividend Yield vs Market

company0.9%marketbottom25%1.9%markettop25%5.4%industryaverage2.7%forecastin3Years1.3%

Current dividend yield vs market & industry

Notable Dividend: RTO's dividend (0.89%) isn’t notable compared to the bottom 25% of dividend payers in the UK market (1.94%).

High Dividend: RTO's dividend (0.89%) is low compared to the top 25% of dividend payers in the UK market (5.4%).


Stability and Growth of Payments

Stable Dividend: RTO is not paying a notable dividend for the UK market, therefore no need to check if payments are stable.

Growing Dividend: RTO is not paying a notable dividend for the UK market, therefore no need to check if payments are 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?

6.3yrs

Average management tenure


CEO

Andy Ransom (56yo)

6.3yrs

Tenure

UK£4,406,700

Compensation

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


CEO Compensation Analysis

Compensation vs Market: Andy's total compensation ($USD5.67M) is about average for companies of similar size in the UK market ($USD4.65M).

Compensation vs Earnings: Andy's compensation has increased whilst the company is unprofitable.


Leadership Team

NamePositionTenureCompensationOwnership
Andrew Ransom
CEO & Executive Director6.3yrsUK£4.41m0.085% £7.9m
Jeremy Townsend
CFO & Executive Director9.5yrsUK£2.71m0.040% £3.7m
Katharine Rycroft
Head of Investor Relations0yrsno datano data
Daragh P. Fagan
Group General Counsel & Company Secretary6.4yrsno datano data
Malcolm Padley
Director of Corporate Communications14.1yrsno datano data
Gary Booker
Chief Marketing2.1yrsno datano data
Vanessa Evans
Group Human Resources Director4.1yrsno datano data
Stuart Ingall-Tombs
Chief Financial Officer of Europe5.3yrsno datano data
John Myers
Managing Director of North America6.3yrsno datano data
Phill Wood
Managing Director of UK & Rest of World6.3yrsno datano data

6.3yrs

Average Tenure

54yo

Average Age

Experienced Management: RTO's management team is seasoned and experienced (6.3 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Andrew Ransom
CEO & Executive Director6.3yrsUK£4.41m0.085% £7.9m
Jeremy Townsend
CFO & Executive Director9.5yrsUK£2.71m0.040% £3.7m
Ian Harley
Chairman of Rentokil Initial Pension Trustee Limited12.6yrsUK£30.00kno data
Richard Solomons
Independent Chairman0.8yrsno data0.0014% £126.2k
Julie Southern
Non-Executive Director5.6yrsUK£75.00k0.00027% £25.1k
Linda Yueh
Non-Executive Director2.3yrsUK£60.00k0.000090% £8.4k
Angela Seymour-Jackson
Non-Executive Director7.9yrsUK£60.00k0.00057% £52.9k
John Pettigrew
Senior Independent Director0.8yrsUK£60.00k0.00054% £50.1k

6.8yrs

Average Tenure

56yo

Average Age

Experienced Board: RTO's board of directors are considered experienced (6.8 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.


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£9.279b
  • Shares outstanding: 1.84b
  • 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 services from rodents to flying and crawling insects, as well as to other forms of wildlife management for commercial and residential customers. The company also provides hygiene services, including the provision and maintenance of products, such as air fresheners, sanitizers, feminine hygiene units, hand dryers, paper and linen towel dispensers, soap dispensers, toilet paper dispensers, and floor protection mats. In addition, it engages in the supply and laundering of workwear, uniforms, cleanroom uniforms, and protective equipment. Further, the company installs and services interior and exterior plant displays, flowers, replica foliage, Christmas decorations, and ambient scenting for commercial businesses; offers property care services consisting of damp proofing, property conservation, and woodworm and wood rot treatment; and provides a range of specialized deep cleaning, and specialist industrial cleaning and disinfection services, including the professional and discreet disinfection of areas that have been exposed to bio-hazardous situations, such as crime and trauma scenes, prison cells, void properties, emergency vehicles, and healthcare establishments. Additionally, it offers a range of healthcare waste management services comprising the collection, disposal, and recycling of hazardous and offensive waste produced by businesses and organizations associated with the provision of healthcare; and color-coded sharps disposal bins to deal with various types of waste. Rentokil Initial plc was founded in 1903 and is headquartered in Camberley, the United Kingdom. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/27 20:35
End of Day Share Price2020/02/27 00:00
Earnings2019/06/30
Annual Earnings2018/12/31


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.