Last week, you might have seen that Rollins, Inc. (NYSE:ROL) released its annual result to the market. The early response was not positive, with shares down 2.7% to US$36.02 in the past week. Rollins reported US$2.2b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.53 beat expectations, being 3.2% higher than what the analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus from Rollins' three analysts is for revenues of US$2.32b in 2021, which would reflect a satisfactory 7.3% increase on its sales over the past 12 months. Statutory earnings per share are predicted to expand 16% to US$0.62. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.28b and earnings per share (EPS) of US$0.58 in 2021. So the consensus seems to have become somewhat more optimistic on Rollins' earnings potential following these results.
The consensus price target rose 11% to US$36.00, suggesting that higher earnings estimates flow through to the stock's valuation as well. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Rollins at US$39.00 per share, while the most bearish prices it at US$33.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Rollins is an easy business to forecast or the the analysts are all using similar assumptions.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We can infer from the latest estimates that forecasts expect a continuation of Rollins'historical trends, as next year's 7.3% revenue growth is roughly in line with 7.9% annual revenue growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 6.6% next year. It's clear that while Rollins' revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Rollins' earnings potential next year. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Rollins analysts - going out to 2025, and you can see them free on our platform here.
You can also see whether Rollins is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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