Rollins (ROL): Reassessing Valuation After Record Q3 Revenue, Margin Gains and a Fresh Rating Upgrade

Rollins (ROL) just delivered record third quarter revenue with better margins, and that, paired with a fresh rating upgrade, has given the stock an extra dose of investor confidence.

See our latest analysis for Rollins.

The upbeat quarter has landed on top of an already strong run, with the share price up about 30.8% year to date and a three year total shareholder return of roughly 67.6%, suggesting momentum is still very much with Rollins.

If Rollins recent climb has you rethinking where growth might come from next, it could be worth scouting fast growing stocks with high insider ownership for other under the radar compounders.

With Rollins now trading near analyst targets and at a hefty premium to many service peers, the key question is whether investors are underestimating its durable growth runway or if the share price already reflects years of expansion ahead.

Most Popular Narrative: 2.2% Undervalued

With Rollins last closing at $60.24 versus a narrative fair value of $61.61, the dominant view suggests modest upside from here, grounded in disciplined forecasts.

The analysts have a consensus price target of $58.727 for Rollins based on their expectations of its future earnings growth, profit margins and other risk factors. 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.

Read the complete narrative.

Curious how steady mid single digit growth assumptions, fatter margins, and a premium earnings multiple can still justify upside from today? The real story sits inside that narrative.

Result: Fair Value of $61.61 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, sustained cost pressures or missteps in integrating acquisitions could squeeze margins and challenge the premium valuation underpinning the modest upside narrative.

Find out about the key risks to this Rollins narrative.

Another Angle on Valuation

Looked at through its earnings multiple, Rollins screens as richly priced, with a P/E of 56.2x versus 23.8x for the US Commercial Services industry and a 41x peer average, well above a 29.2x fair ratio. Is the market paying too far ahead for quality and visibility?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Rollins Narrative

If the current view does not quite match your own or you would rather dive into the numbers yourself, you can build a personalized narrative in just a few minutes: Do it your way.

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

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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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