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Rentokil Initial Plc (GB:RTO)
LSE:RTO
Top Page
Rentokil Initial
(LSE:RTO)
62Neutral
Positive Factors
International Performance
The international business is solid with 4.7% organic growth and a 19.3% adjusted operating margin.
Leadership Changes
Paul Edgecliffe-Johnson's appointment as new group CFO is seen as fast approaching a relisting in the US, following his successful integration and transition from IFRS to GAAP at Flutter.
Strategic Initiatives
Rentokil plans strategic pivots to recover growth by expanding its branch network and focusing on regional brands.
Negative Factors
North America Challenges
North America remains challenging, with weak lead generation continuing.
Paid Search Costs
Paid search costs have trended up in North America, a potential drag on FY25 margins.
Website Traffic
Rentokil experiences a greater decline in website traffic compared to Rollins, with a decrease of 27%.
Rentokil Initial (RTO) vs. S&P 500 (SPY)
Market Cap
£8.41B
Dividend Yield2.71%
Average Volume (3M)8.74M
Price to Earnings (P/E)27.5
Beta (1Y)1.21
Revenue Growth1.13%
EPS Growth-19.48%
CountryUK
Employees68,485
SectorIndustrials
Sector Strength70
IndustrySpecialty Business Services
Share Statistics
EPS (TTM)0.12
Shares Outstanding2,524,539,800
10 Day Avg. Volume9,394,150
30 Day Avg. Volume8,737,925
Financial Highlights & Ratios
PEG Ratio0.91
Price to Book (P/B)N/A
Price to Sales (P/S)1.61
Price to Cash Flow (P/CF)14.20
P/FCF Ratio15.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
445.00pPrice Target Upside32.44% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering8
Rentokil Initial Business Overview & Revenue Model
Company DescriptionRentokil Initial (RTO) is a leading global services company specializing in pest control and hygiene services. Headquartered in the United Kingdom, the company operates across various sectors, including commercial, residential, and industrial markets. Its core services include pest control, washroom hygiene, and workwear services, aimed at ensuring safe, clean, and healthy environments for its clients worldwide.
How the Company Makes MoneyRentokil Initial generates revenue primarily through its pest control and hygiene services. The pest control segment provides solutions for the prevention and control of pests, including rodents, insects, and other wildlife, to commercial and residential customers. This segment is a major revenue driver, with recurring service contracts ensuring a steady income stream. The hygiene services division offers washroom and hygiene solutions, such as hand sanitizers, air fresheners, and sanitary waste disposal services. This division also operates on a contract basis, providing consistent revenue. Additionally, the company offers workwear services, supplying and laundering uniforms and protective clothing for various industries. Rentokil Initial's earnings are further bolstered by strategic acquisitions and partnerships, which expand its market reach and service capabilities, enhancing its competitive edge in delivering essential services globally.
Rentokil Initial Financial Statement Overview
Summary
Income Statement
Balance Sheet
Cash Flow
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 5.41B | 5.38B | 3.71B | 2.95B | 2.79B | 2.68B | Gross Profit |
| 784.00M | 1.50B | 977.00M | 714.80M | 653.00M | 577.20M | EBIT |
| 759.00M | 766.00M | 317.00M | 346.50M | 293.80M | 265.60M | EBITDA |
| 998.00M | 1.16B | 747.00M | 676.80M | 586.50M | 687.40M | Net Income Common Stockholders |
| 392.00M | 381.00M | 232.00M | 263.00M | 186.00M | 283.80M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.56B | 1.56B | 2.09B | 597.90M | 2.34B | 309.60M | Total Assets |
| 11.13B | 11.13B | 11.92B | 4.32B | 5.84B | 3.39B | Total Debt |
| 4.73B | 4.73B | 5.40B | 1.93B | 3.40B | 1.36B | Net Debt |
| 3.17B | 3.17B | 3.31B | 1.34B | 1.23B | 1.05B | Total Liabilities |
| 7.04B | 7.04B | 7.82B | 3.06B | 4.71B | 2.39B | Stockholders Equity |
| 4.09B | 4.09B | 4.10B | 1.26B | 1.13B | 1.00B |
| Cash Flow | Free Cash Flow | ||||
| 523.00M | 526.00M | 410.00M | 403.30M | 391.70M | 292.00M | Operating Cash Flow |
| 716.00M | 737.00M | 600.00M | 563.20M | 544.20M | 462.90M | Investing Cash Flow |
| -325.00M | -416.00M | -1.20B | -441.10M | -327.00M | -61.10M | Financing Cash Flow |
| -376.00M | -361.00M | 1.32B | -417.10M | 62.20M | -221.30M |
Rentokil Initial Technical Analysis
Negative
336.00
Price Trends
361.39
Negative
374.94
Negative
394.91
Negative
Market Momentum
-7.77
Negative
47.37
Neutral
54.66
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:RTO, the sentiment is Negative. The current price of 336 is below the 20-day moving average (MA) of 336.30, below the 50-day MA of 361.39, and below the 200-day MA of 394.91, indicating a bearish trend. The MACD of -7.77 indicates Negative momentum. The RSI at 47.37 is Neutral, neither overbought nor oversold. The STOCH value of 54.66 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GB:RTO.
Rentokil Initial Risk Analysis
Rentokil Initial disclosed 27 risk factors in its most recent earnings report. Rentokil Initial reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Rentokil Initial Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | £5.94B | 19.95 | 13.99% | 2.46% | 6.10% | 33.05% | |
75 Outperform | £9.58B | 33.32 | 16.90% | 0.88% | 11.94% | 20.48% | |
72 Outperform | $58.82B | 23.25 | ― | 14.70% | 3.76% | ||
71 Outperform | £4.71B | 14.27 | 11.08% | 4.19% | -6.75% | -0.02% | |
62 Neutral | £8.41B | 27.50 | 7.38% | 2.71% | 1.13% | -19.48% | |
62 Neutral | $7.70B | 13.14 | 3.53% | 3.32% | 3.90% | -14.25% |
* Industrials Sector Average
Performance Comparison
GB:RTO
Rentokil Initial
336.00
-102.60
-23.39%
GB:RR
Rolls-Royce Holdings
709.60
302.80
74.43%
GB:SMIN
Smiths Group plc
1,808.00
210.72
13.19%
GB:DCC
DCC plc
4,870.00
-520.83
-9.66%
GB:HLMA
Halma plc
2,602.00
381.28
17.17%
Rentokil Initial Earnings Call Summary
Earnings Call Date: Mar 6, 2025 | % Change Since: -11.93% | Next Earnings Date: Jul 31, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted significant international growth and improvements in customer and colleague retention. However, North American operations faced challenges with low organic growth and weak lead flow, impacting overall performance. The decline in operating profit and the need for better investment strategies were notable concerns.Highlights
International Revenue Growth
The International business delivered revenue growth of 8.2%, with organic revenue contributing 4.7%. Pest Control organic growth in International markets was strong at 5.3%.
Customer and Colleague Retention
Customer retention improved by 60 basis points to over 81% in each month of Q4 2024, and colleague retention increased by 4.2% in North America, with Terminix colleague retention up by 13.9% since integration began.
Record High Customer Satisfaction
In 2024, an increase in Net Promoter Score and improved customer satisfaction levels were achieved, with customer retention rising by 50 basis points.
Successful Integration Efforts
The integration process is progressing well, with over 250 branches now operating on unified systems, and 15% of the Terminix branch network fully integrated.
Lowlights
North American Organic Growth Challenges
North America underperformed with only 1.3% growth, and organic growth in North American Pest Control was a mere 1.5%.
Decline in Operating Profit
Adjusted operating profit decreased by 7.1% to GBP 860 million, with a corresponding margin reduction of 130 basis points.
Weak Lead Flow and Sales Challenges
Ongoing weak lead flow and sales conversion issues persisted, particularly affecting Q1 2025 performance expectations.
Impact of Inflation and Investment Ineffectiveness
Investment efforts in 2024 did not drive optimal effectiveness, leading to a need to redirect funds in 2025.
Company Guidance
The call highlighted several key financial metrics and strategic goals for Rentokil Initial in 2024 and plans for 2025. The company reported a revenue of GBP 5.6 billion for 2024, indicating a 3.9% growth, with an organic revenue increase of 2.8%. The International segment saw an 8.2% revenue increase, largely driven by strong pest control growth of 5.3%. Notably, customer retention improved to over 80%, and colleague retention rose by 2.4%. In North America, the business underperformed with only 1.3% growth, but operational adjustments are underway including the integration of 58 branch systems and the opening of 10 satellite branches. For 2025, Rentokil aims to enhance lead generation, sales conversion, and expand its branch network to over 500 locations. The company expects operating profit margins in North America to exceed 20% by 2027, supported by cost synergies and strategic marketing efforts. Free cash flow for 2024 was GBP 410 million, with a cash conversion rate of 80%, and the company is focused on maintaining a strong balance sheet with a net debt-to-EBITDA ratio of 2.9x. Rentokil also plans to continue its progressive dividend policy with a proposed final dividend of 5.93 pence per share.Rentokil Initial Corporate Events
Business Operations and StrategyRegulatory Filings and Compliance
Rentokil Initial Sees Change in Major Shareholdings
Neutral
Apr 9, 2025
Rentokil Initial PLC has been notified of a change in major shareholdings by Independent Franchise Partners, LLP, which now holds 5% of the voting rights in the company. This acquisition of voting rights may influence Rentokil Initial’s shareholder dynamics and potentially impact its strategic decisions, reflecting the ongoing interest and investment in the company’s operations.
Spark’s Take on GB:RTO Stock
According to Spark, TipRanks’ AI Analyst, GB:RTO is a Neutral.
Rentokil Initial benefits from strong revenue growth and cost management, but faces challenges with declining net profit margins and cash flow sustainability. The stock currently exhibits a bearish trend and may be overvalued. Positive international growth and strategic initiatives are counterbalanced by North American operational challenges. The recent share purchase reflects confidence in future prospects.
To see Spark’s full report on GB:RTO stock, click here.
Other
Rentokil Initial Announces Significant Share Purchase by Associated Trust
Positive
Mar 14, 2025
Rentokil Initial plc announced a transaction involving the purchase of 1,750 American Depositary Shares by the Trustees of the David John Frear Revocable Trust, a person closely associated with David Frear, a Non-Executive Director. This transaction, conducted on the New York Stock Exchange, underscores the trust’s confidence in the company’s market position and potential growth, reflecting positively on Rentokil Initial’s operational outlook.
Business Operations and StrategyFinancial Disclosures
Rentokil Initial Reports 2024 Results and Strategic Updates
Neutral
Mar 6, 2025
Rentokil Initial reported its 2024 preliminary results, showing a challenging year with lower profits and margins, but in line with revised guidance. The company is progressing with the integration of Terminix, expected to complete by the end of 2026, which has impacted North American performance. Despite this, improvements in colleague and customer retention were noted. The company is revising its branding and branch strategy to enhance growth and efficiency, aiming for North American margins to exceed 20% post-integration. Rentokil Initial remains confident in delivering sustained growth due to its global presence, strong brand portfolio, and focus on customer service and innovation.
Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures
Rentokil Initial Reports FY 2024 Results and Announces North America Leadership Change
Neutral
Jan 28, 2025
Rentokil Initial PLC announced that its financial results for FY 2024 met market expectations, with notable organic revenue growth in North America and across the Group. The company is undergoing a management change as Brad Paulsen steps down as CEO of North America, with Alain Moffroid stepping in as Interim CEO, bringing extensive leadership experience to the role. This transition is part of the ongoing integration and strategic initiatives in North America, aimed at enhancing customer experience and operational efficiency.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.