Rollins Inc (ROL) stock analysis

P/E below its 5-year median

Rollins's P/E of 35.3 is below its own 5-year median of 51.7.

P/E above the industry

Rollins's P/E of 35.3 is above the Business Services median of 26.9.

EV/EBITDA below its 5-year median

Rollins's EV/EBITDA of 21.5 is below its 5-year median of 32.1.

P/B above the industry

Rollins's price-to-book of 13.23 is above the Business Services median of 2.98.

Trading below fair value

The share price of $38.47 is below our fair value estimate of $38.56.

Margin of safety under 20%

The price is 0.2% below fair value, less than the 20% cushion we look for.

Revenue growing 10%+ a year

Revenue grew 11.7% a year over the last three fiscal years.

EPS growing 10%+ a year

Diluted EPS grew 13.3% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew 2.0% over the last twelve months, against a 5-year average of 14.6% a year.

Growing slower than the industry

Revenue grew 8.3% over the last twelve months; the Business Services median is 9.1%.

Company guidance

No outlook found in earnings releases from the last twelve months.

Gross margin slipping

Gross margin was 52.1% over the last twelve months, against 52.9% a year earlier.

Return on equity over 15%

Return on equity was 36.0% over the last twelve months and averaged 35.5% over five years.

Return on capital over 10%

Return on invested capital was 38.1%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Rollins's return on equity of 36.0% is above the Business Services median of 1.4%.

Earnings grew over 5 years

Net income grew 14.6% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 13.2% over the last twelve months, against a 5-year average of 14.1%.

Net margin above the industry

Rollins's net margin of 13.2% is above the Business Services median of -1.7%.

Low debt

Debt is 17.2% of shareholders' equity, under the 40% we consider low.

Debt trend

Needs a balance sheet from five years ago with positive equity.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 291% of total debt.

Interest well covered

Operating income covers interest expense 20.1 times.

Short-term assets don't cover short-term debts

Current assets are 0.62 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 7.69; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Rollins paid dividends worth 1.4% of the share price over the last twelve months.

Yield below Treasuries

The 1.4% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Rollins yields 1.4%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 66.8% of net income.

Covered by free cash flow

Dividends take 52.3% of free cash flow.