ROLLINS INC (NYSE:ROL) – A Quality Stock Worth Considering

ROLLINS INC (NYSE:ROL) stands out as a strong candidate for quality investors, meeting key criteria for revenue growth, profitability, and financial health. The company, a global provider of pest and termite control services, demonstrates consistent performance and efficient capital allocation.

Key Strengths of ROLLINS INC

• Revenue and Profit Growth: Over the past five years, ROL has delivered an annual revenue growth of 8.4%, while EBIT growth has been even stronger at 15.7%, indicating improving operational efficiency.
• High Return on Invested Capital (ROIC): With an ROIC of 124.6% (excluding cash and goodwill), the company generates exceptional returns on capital deployed, well above the 15% threshold for quality investments.
• Strong Profit Quality: The five-year average profit quality stands at 124%, meaning the company converts net income into free cash flow effectively.
• Low Debt Burden: ROL’s debt-to-free cash flow ratio is just 0.81, suggesting it could repay all debt in less than a year using current cash flows.

Fundamental Analysis Summary

Our fundamental report assigns ROL a rating of 7 out of 10, highlighting its outstanding profitability and financial health. Key takeaways include:

• Profitability: High margins, with an operating margin of 19.3% and a return on equity of 35.2%, placing it among the top performers in its industry.
• Valuation: The stock trades at a premium (P/E of 55.8), which may be justified by its strong growth and profitability.
• Dividend: While the yield is modest at 1.16%, the company has a reliable track record of dividend growth, increasing payouts by 14.5% annually over the past decade.

For investors seeking stable, high-quality businesses, ROLLINS INC presents a compelling case.

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Disclaimer

This is not investment advice. Always conduct your own research before making investment decisions.