ROLLINS INC (NYSE:ROL) – A Caviar Cruise Quality Pick with Steady Growth and High ROIC

Quality investing looks for companies with lasting competitive edges, solid financials, and steady profits—traits that help them endure over time. The Caviar Cruise stock screening method, based on Luc Kroeze’s The Caviar Formula, uses strict quantitative measures to find these businesses. The strategy highlights revenue and earnings growth, high returns on invested capital (ROIC), reasonable debt, and strong cash flow conversion. These factors guide investors to firms that can keep performing well, even in tough economic conditions.

One firm that fits this model is ROLLINS INC (NYSE:ROL), a top provider of pest and termite control services worldwide. The company’s financials match the Caviar Cruise standards, making it an attractive pick for investors focused on quality.

Key Strengths of ROLLINS INC

Steady Revenue and EBIT Growth

• Revenue Growth (5Y CAGR): 8.7% – Beats the Caviar Cruise minimum of 5%, showing stable demand for its services.
• EBIT Growth (5Y CAGR): 15.67% – Grows much faster than revenue, pointing to efficient operations and strong pricing.

For quality investors, this gap between revenue and EBIT growth matters—it hints the firm is growing profits effectively, likely from scale or cost control.

Outstanding Return on Invested Capital

• ROIC (Excluding Cash & Goodwill): 129.8% – Far exceeds the 15% target, proving excellent use of capital.

High ROIC marks top-tier firms, as it reveals management’s skill in earning big returns on reinvested money. ROLLINS’ number is especially impressive, ranking it near the top in its sector.

Healthy Cash Flow and Debt Control

• Debt-to-Free Cash Flow: 0.86 – Means the firm could clear all debt in less than a year with current cash flow, well under the screen’s 5-year cap.
• Profit Quality (5Y Avg.): 124% – Free cash flow tops net income, showing high-quality earnings and smart reinvestment.

These figures highlight ROLLINS’ financial strength. Low debt cuts bankruptcy risk, while strong cash flow supports dividends, buybacks, or deals.

Profitability and Margin Growth

The firm’s margins back its quality profile:

• Operating Margin: 19.14% (top 10% of peers)
• Profit Margin: 13.7% (top 12% of peers)

Margins have grown over time, a sign of competitive edges—like brand power or operational skill—that let ROLLINS keep pricing strong.

Fundamental Analysis Summary

ROLLINS scores 7/10 in our fundamental analysis, with top marks in profitability (9/10) and financial health (7/10). Key points:

• Profitability: Leading ROIC, ROE, and margins.
• Growth: Double-digit revenue and EPS growth, though future forecasts hint at slower gains.
• Valuation: High multiples (P/E of 55.86) reflect quality but may turn off value seekers.

Why It Suits Quality Investing

ROLLINS works in a downturn-proof industry, serves customers globally, and earns repeat revenue—traits that fit the Caviar Cruise screen’s qualitative goals. Its skill in growing earnings fast with little debt makes it a classic "buy-and-hold" pick.

For investors hunting similar chances, the full Caviar Cruise screen results offer more ideas.

Disclaimer: This article is not investment advice. Do your own research or talk to a financial advisor before deciding.