Last Update 01 Dec 25

ROL: Recurring Revenue Strength and Untapped Market Will Support Measured Upside Ahead

Analysts have raised their price target for Rollins by $2 to $64, citing the company's resilient business model, strong quarterly performance, and substantial long-term growth potential in the under-penetrated U.S. pest control market.

Analyst Commentary

Recent analyst updates on Rollins highlight both the strengths underpinning the company’s valuation and the factors warranting continued attention from investors.

Bullish Takeaways

Bullish analysts have raised price targets, reflecting confidence in Rollins’ robust quarterly results and growth trajectory.
Revenue, EBITDA margins, and EPS have consistently outperformed expectations and consensus estimates. This signals effective operational execution.
The company’s resilient business model, supported by the non-cyclical and essential nature of pest control, contributes to its stable performance even in varying market conditions.
With 80% of revenue generated from recurring service contracts, Rollins benefits from strong revenue visibility and predictable cash flows.
The U.S. pest control market remains under-penetrated. This gives Rollins a long runway for continued growth, supported by substantial market opportunity.

Bearish Takeaways

Some analysts note that while current performance is strong, future growth may depend on Rollins’ ability to maintain operating margins as competition intensifies.
A rising price target can raise expectations for consistent outperformance, increasing valuation risk if growth moderates or market conditions shift.
Saturation in key markets or delays in executing on strategic initiatives could temper upside potential in the medium term.
Dependence on recurring revenue streams, while providing stability, could potentially limit rapid revenue acceleration without further market expansion or new service offerings.

What's in the News

Rollins completed a share repurchase of 3,478,260 shares for $200 million, concluding the buyback program announced in November 2025 (Key Developments).
The Board of Directors declared a regular quarterly cash dividend of $0.1825 per share. This represents an 11% increase from the previous year and is payable December 10, 2025 (Key Developments).
The company recently completed a follow-on equity offering of $1 billion by issuing over 17 million shares at a price of $57.5 per share (Key Developments).
Rollins continues to pursue acquisitions, maintaining a full pipeline and focusing on opportunities across North America. This includes increased activity in Canada and the Midwest United States (Key Developments).
Certain Common Stock are subject to lock-up agreements that restrict sales for specified periods through November 2026 by directors, officers, and major shareholders (Key Developments).

Valuation Changes

Fair Value: Remains steady at $61.61, with no change from previous estimates.
Discount Rate: Has fallen slightly from 6.99% to 6.98%, reflecting a marginal improvement in perceived risk.
Revenue Growth: Unchanged at 8.91%, indicating stable forecasts for top-line expansion.
Net Profit Margin: Virtually unchanged, holding at approximately 14.91%.
Future P/E: Has edged down minimally from 51.60x to 51.59x, suggesting little movement in valuation expectations.

Strategic acquisitions and multi-brand approach enhance revenue growth, earnings, and competitive advantage throughout economic fluctuations.
Investing in sales, marketing, and operational efficiency drives organic and commercial division growth, boosting margins and recurring revenue.
Market uncertainty, cost pressures, and risks from mergers along with reliance on recurring revenue could impact Rollins' growth and profitability.

Catalysts

About Rollins

Through its subsidiaries, provides pest and wildlife control services to residential and commercial customers in the United States and internationally.What are the underlying business or industry changes driving this perspective?

The acquisition of Saela Pest Control is expected to add between $45 million to $50 million in revenue in 2025 and is anticipated to be accretive to earnings, signaling potential revenue growth and earnings enhancement.
Continued strategic investments in sales staffing and marketing are expected to drive organic growth, particularly as the pest control season ramps up, which could lead to increased revenue.
Rollins plans to improve its margin profile through ongoing operational efficiency efforts, suggesting future potential for enhanced net margins.
The company's commercial division is experiencing double-digit recurring revenue growth due to strategic resource allocation, indicating a strong potential for revenue growth in this sector.
Rollins' multi-brand strategy offers diversified revenue streams and competitive advantages, potentially leading to sustained revenue growth and consistent financial performance across economic cycles.

Rollins Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Rollins's revenue will grow by 8.8% annually over the next 3 years.
Analysts assume that profit margins will increase from 13.7% today to 14.9% in 3 years time.
Analysts expect earnings to reach $686.0 million (and earnings per share of $1.4) by about September 2028, up from $489.3 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 50.7x on those 2028 earnings, down from 56.8x today. This future PE is greater than the current PE for the US Commercial Services industry at 25.7x.
Analysts expect the number of shares outstanding to grow by 0.07% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.88%, as per the Simply Wall St company report.

Rollins Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Market uncertainty and macroeconomic factors could lead to weakened demand trends, especially in the consumer-facing residential business, impacting revenue growth.
Higher fleet expenses and potential tariff impacts could increase operational costs and pressure net margins.
Exposure to fluctuations in currencies could continue to negatively impact organic growth and revenue figures.
Risks associated with M&A activity, such as higher debt levels, increased interest expenses, and integration challenges, could impact earnings and long-term profitability.
Dependency on recurring revenue and potential softness in onetime special commercial services might affect revenue stability and predictability.

Valuation

How have all the factors above been brought together to estimate a fair value?

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.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $4.6 billion, earnings will come to $686.0 million, and it would be trading on a PE ratio of 50.7x, assuming you use a discount rate of 6.9%.
Given the current share price of $57.32, the analyst price target of $58.73 is 2.4% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

ROL: Recurring Contracts And Market Expansion Will Drive Predictable Returns Ahead