Rollins (ROL): Margin Dips to 14% Raises Questions on Premium Valuation

Rollins (ROL) posted a net profit margin of 14%, just under last year’s 14.2%, while earnings are forecast to grow at a steady 9.99% per year. Revenue is expected to rise by 7.9% annually, slightly lagging the broader US market's profit and revenue growth rates. Despite a strong track record, with five-year earnings growth averaging 12%, recent results show growth moderating to 9.9%. Investors will notice this combination of healthy profitability and high-quality earnings. However, with expansion slowing and valuation multiples higher than peers, the path forward depends on sustaining performance at a premium price.

See our full analysis for Rollins.

Next, we’ll see how these headline numbers compare with the market narratives on Simply Wall St. We will consider which perspectives hold up and which face new questions in light of the latest results.

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Margins Steady as Investments Continue

• Net profit margin remains at a healthy 14%, and analysts expect margin expansion to 14.9% within three years, despite recent profitability slightly trailing longer-term averages.
• According to the analysts' consensus view, ongoing investments in sales and marketing are expected to unlock organic growth and drive commercial division recurring revenue, even as cost pressures and operational spending remain in focus.
  • The company’s strategic acquisitions, such as Saela Pest Control which is expected to add $45 to $50 million in 2025, aim to boost both total revenue and profitability over time.
  • Efforts to improve operational efficiency are anticipated to support better margins as the pest control season picks up.

See how strategic moves are expected to shape Rollins’ margins and recurring growth in the analysts' full narrative. 📊 Read the full Rollins Consensus Narrative.

Analyst Price Target Close to Market

• With Rollins’ share price at $57.79, analysts’ consensus target is $59.83, only around 3.5% higher. This points to muted near-term upside given current trends and forecasts.
• Consensus narrative explains that for shares to justify this target, revenue must grow to $4.6 billion and earnings must reach $686 million by 2028, implying significant confidence in continued operational gains.
  • Most analysts expect the price-to-earnings multiple to remain elevated at 50.7 times, well above the US Commercial Services industry average of 25.7 times, contingent on strong delivery against forecasts.
  • Disagreement remains on upside. The most optimistic analysts target $72.00, while the lowest forecast is $44.00, which highlights how future growth is critical to valuation.

Premium Valuation vs. Peers and Industry

• Rollins’ current P/E ratio of 54.3 times stands well above the industry average (23.2 times) and peers (39.6 times), while the share price also trades well above the DCF fair value of $43.51.
• Analysts’ consensus view highlights that while profitability and revenue growth remain solid, these valuation premiums mean expectations are high and any stumble could quickly put pressure on the stock.
  • Even with high-quality earnings and recurring revenue, Rollins’ elevated multiple relies on delivering consistent operational and margin expansion to avoid multiple contraction.
  • Market participants closely watch for whether commercial and organic growth materializes as forecast, given the company’s history of strong, but recently moderating, growth rates.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Rollins on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Notice something in the results that stands out to you? Take just a few minutes to build your own unique take on the data. Do it your way.

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Rollins.

See What Else Is Out There

Rollins’ premium valuation leaves little room for error. Any slowdown in revenue or margin expansion could put downward pressure on the share price.

If you want more value for your money, use these 848 undervalued stocks based on cash flows to focus on companies whose strong fundamentals aren’t already priced into the stock.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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