Rollins Inc (NYSE:ROL): A Quality Stock Worth Considering

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Rollins Inc (NYSE:ROL) is a leading provider of pest and termite control services, operating globally through subsidiaries and franchises. The company serves both residential and commercial customers, making it a stable player in the essential services sector.

Quality investing focuses on identifying companies with strong financial health, consistent growth, and sustainable competitive advantages. These businesses often generate high returns on invested capital, maintain manageable debt levels, and demonstrate reliable profitability. Rollins Inc fits many of these criteria, making it a potential candidate for long-term investors.

Key Quality Metrics for Rollins Inc

Strong Revenue and EBIT Growth
Rollins Inc has delivered solid revenue growth, with a 5-year CAGR of 8.43%. More importantly, its EBIT growth over the same period stands at 15.67%, indicating improving profitability. This suggests the company benefits from economies of scale or pricing power—a hallmark of quality businesses.
High Return on Invested Capital (ROIC)
The company's ROIC (excluding cash and goodwill) is an impressive 124.56%, far exceeding the 15% threshold typically sought by quality investors. This indicates efficient capital allocation and strong operational performance.
Low Debt and Strong Cash Flow
Rollins Inc has a Debt-to-Free Cash Flow ratio of just 0.81, meaning it could theoretically pay off all its debt in less than a year using current cash flows. This financial strength reduces risk and supports long-term stability.
High Profit Quality
The company’s 5-year average Profit Quality—measuring how well net income converts to free cash flow—stands at 123.95%. This suggests earnings are backed by real cash generation rather than accounting adjustments.

Fundamental Analysis Summary

According to Chartmill’s fundamental report, Rollins Inc scores well on profitability and financial health. Key highlights include:

Profitability: High ROIC (21.39%), strong margins (Operating Margin of 19.27%), and consistent earnings growth.
Financial Health: Excellent solvency metrics, though liquidity ratios (Current and Quick Ratios) are slightly below industry averages.
Valuation: The stock trades at a premium (P/E of 56.56), which may be justified by its strong fundamentals but warrants caution for value-focused investors.

Why Rollins Inc Fits Quality Investing

Beyond the numbers, Rollins Inc operates in a recession-resistant industry, benefits from recurring revenue streams, and has a global presence. These factors contribute to its resilience and long-term growth potential.

For investors seeking more quality stock ideas, explore the Caviar Cruise screen.