RENTOKIL INITIAL PLC-SP ADR (RTO) Stock Fundamental Analysis
NYSE:RTO - New York Stock Exchange, Inc. - US7601251041 - ADR - Currency: USD
RTO gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 84 industry peers in the Commercial Services & Supplies industry. RTO scores excellent on profitability, but there are concerns on its financial health. RTO is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year RTO was profitable.
RTO had a positive operating cash flow in the past year.
Each year in the past 5 years RTO has been profitable.
In the past 5 years RTO always reported a positive cash flow from operatings.
1.2 Ratios
With a decent Return On Assets value of 2.91%, RTO is doing good in the industry, outperforming 60.24% of the companies in the same industry.
The Return On Equity of RTO (7.26%) is better than 62.65% of its industry peers.
RTO has a Return On Invested Capital (6.63%) which is in line with its industry peers.
RTO had an Average Return On Invested Capital over the past 3 years of 5.49%. This is significantly below the industry average of 11.67%.
The 3 year average ROIC (5.49%) for RTO is below the current ROIC(6.63%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.91% | ||
| ROE | 7.26% | ||
| ROIC | 6.63% |
ROA(3y)2.76%
ROA(5y)3.54%
ROE(3y)7.41%
ROE(5y)11.9%
ROIC(3y)5.49%
ROIC(5y)6.1%
1.3 Margins
RTO has a Profit Margin of 5.65%. This is in the better half of the industry: RTO outperforms 68.67% of its industry peers.
RTO's Profit Margin has declined in the last couple of years.
The Operating Margin of RTO (12.71%) is better than 78.31% of its industry peers.
In the last couple of years the Operating Margin of RTO has grown nicely.
The Gross Margin of RTO (83.87%) is better than 97.59% of its industry peers.
RTO's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 12.71% | ||
| PM (TTM) | 5.65% | ||
| GM | 83.87% |
OM growth 3Y2.06%
OM growth 5Y4.21%
PM growth 3Y-14.07%
PM growth 5Y-11.59%
GM growth 3Y1.51%
GM growth 5Y1.16%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so RTO is destroying value.
RTO has about the same amout of shares outstanding than it did 1 year ago.
Compared to 5 years ago, RTO has more shares outstanding
RTO has a better debt/assets ratio than last year.
2.2 Solvency
RTO has an Altman-Z score of 2.04. This is not the best score and indicates that RTO is in the grey zone with still only limited risk for bankruptcy at the moment.
The Altman-Z score of RTO (2.04) is comparable to the rest of the industry.
The Debt to FCF ratio of RTO is 8.87, which is on the high side as it means it would take RTO, 8.87 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 8.87, RTO is in line with its industry, outperforming 59.04% of the companies in the same industry.
RTO has a Debt/Equity ratio of 0.67. This is a neutral value indicating RTO is somewhat dependend on debt financing.
RTO has a Debt to Equity ratio (0.67) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.67 | ||
| Debt/FCF | 8.87 | ||
| Altman-Z | 2.04 |
ROIC/WACC0.88
WACC7.57%
2.3 Liquidity
RTO has a Current Ratio of 0.81. This is a bad value and indicates that RTO is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 0.81, RTO is doing worse than 83.13% of the companies in the same industry.
A Quick Ratio of 0.72 indicates that RTO may have some problems paying its short term obligations.
RTO's Quick ratio of 0.72 is on the low side compared to the rest of the industry. RTO is outperformed by 83.13% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.81 | ||
| Quick Ratio | 0.72 |
3. Growth
3.1 Past
The earnings per share for RTO have decreased by -8.19% in the last year.
The Earnings Per Share has been growing by 8.12% on average over the past years. This is quite good.
RTO shows a small growth in Revenue. In the last year, the Revenue has grown by 1.13%.
RTO shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 14.90% yearly.
EPS 1Y (TTM)-8.19%
EPS 3Y5.61%
EPS 5Y8.12%
EPS Q2Q%-17.82%
Revenue 1Y (TTM)1.13%
Revenue growth 3Y22.51%
Revenue growth 5Y14.9%
Sales Q2Q%0.96%
3.2 Future
RTO is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 8.44% yearly.
RTO is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 3.87% yearly.
EPS Next Y5.54%
EPS Next 2Y7.57%
EPS Next 3Y8.44%
EPS Next 5YN/A
Revenue Next Year11.94%
Revenue Next 2Y8.01%
Revenue Next 3Y6.88%
Revenue Next 5Y3.87%
3.3 Evolution
The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 15.96, which indicates a correct valuation of RTO.
74.70% of the companies in the same industry are more expensive than RTO, based on the Price/Earnings ratio.
When comparing the Price/Earnings ratio of RTO to the average of the S&P500 Index (27.30), we can say RTO is valued slightly cheaper.
A Price/Forward Earnings ratio of 15.16 indicates a correct valuation of RTO.
RTO's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. RTO is cheaper than 74.70% of the companies in the same industry.
RTO is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 21.76, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.96 | ||
| Fwd PE | 15.16 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, RTO is valued a bit cheaper than the industry average as 68.67% of the companies are valued more expensively.
69.88% of the companies in the same industry are more expensive than RTO, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 18.5 | ||
| EV/EBITDA | 10.05 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates RTO does not grow enough to justify the current Price/Earnings ratio.
RTO has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)2.88
PEG (5Y)1.96
EPS Next 2Y7.57%
EPS Next 3Y8.44%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.65%, RTO has a reasonable but not impressive dividend return.
RTO's Dividend Yield is rather good when compared to the industry average which is at 2.45. RTO pays more dividend than 86.75% of the companies in the same industry.
RTO's Dividend Yield is comparable with the S&P500 average which is at 2.35.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.65% |
5.2 History
The dividend of RTO is nicely growing with an annual growth rate of 14.30%!
RTO has been paying a dividend for at least 10 years, so it has a reliable track record.
Dividend Growth(5Y)14.3%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
74.59% of the earnings are spent on dividend by RTO. This is not a sustainable payout ratio.
The dividend of RTO is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP74.59%
EPS Next 2Y7.57%
EPS Next 3Y8.44%
22.98
-0.4 (-1.71%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryCommercial Services & Supplies
Earnings (Last)
Earnings (Next)
Inst Owners95.16%
Inst Owner ChangeN/A
Ins Owners0.62%
Ins Owner ChangeN/A
Market Cap11.56B
Analysts72.5
Price Target28.7 (24.89%)
Short Float %0.31%
Short Ratio2.06
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.65% |
Yearly Dividend0.61
Dividend Growth(5Y)14.3%
DP74.59%
Div Incr Years0
Div Non Decr Years0
Ex-Date
Surprises & Revisions
EPS beat(2)N/A
Avg EPS beat(2)N/A
Min EPS beat(2)N/A
Max EPS beat(2)N/A
EPS beat(4)N/A
Avg EPS beat(4)N/A
Min EPS beat(4)N/A
Max EPS beat(4)N/A
EPS beat(8)N/A
Avg EPS beat(8)N/A
EPS beat(12)N/A
Avg EPS beat(12)N/A
EPS beat(16)N/A
Avg EPS beat(16)N/A
Revenue beat(2)N/A
Avg Revenue beat(2)N/A
Min Revenue beat(2)N/A
Max Revenue beat(2)N/A
Revenue beat(4)N/A
Avg Revenue beat(4)N/A
Min Revenue beat(4)N/A
Max Revenue beat(4)N/A
Revenue beat(8)N/A
Avg Revenue beat(8)N/A
Revenue beat(12)N/A
Avg Revenue beat(12)N/A
Revenue beat(16)N/A
Avg Revenue beat(16)N/A
PT rev (1m)2.79%
PT rev (3m)1.47%
EPS NQ rev (1m)N/A
EPS NQ rev (3m)N/A
EPS NY rev (1m)-0.12%
EPS NY rev (3m)-1.4%
Revenue NQ rev (1m)N/A
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)0%
Revenue NY rev (3m)7.91%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.96 | ||
| Fwd PE | 15.16 | ||
| P/S | 1.58 | ||
| P/FCF | 18.5 | ||
| P/OCF | 12.63 | ||
| P/B | 2.03 | ||
| P/tB | N/A | ||
| EV/EBITDA | 10.05 |
EPS(TTM)1.44
EY6.27%
EPS(NY)1.52
Fwd EY6.6%
FCF(TTM)1.24
FCFY5.41%
OCF(TTM)1.82
OCFY7.92%
SpS14.59
BVpS11.35
TBVpS-7.73
PEG (NY)2.88
PEG (5Y)1.96
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.91% | ||
| ROE | 7.26% | ||
| ROCE | 8.66% | ||
| ROIC | 6.63% | ||
| ROICexc | 7.5% | ||
| ROICexgc | N/A | ||
| OM | 12.71% | ||
| PM (TTM) | 5.65% | ||
| GM | 83.87% | ||
| FCFM | 8.52% |
ROA(3y)2.76%
ROA(5y)3.54%
ROE(3y)7.41%
ROE(5y)11.9%
ROIC(3y)5.49%
ROIC(5y)6.1%
ROICexc(3y)6.5%
ROICexc(5y)8.24%
ROICexgc(3y)80.52%
ROICexgc(5y)79.55%
ROCE(3y)7.83%
ROCE(5y)9.4%
ROICexcg growth 3Y27.39%
ROICexcg growth 5Y21.27%
ROICexc growth 3Y-11.58%
ROICexc growth 5Y-6.54%
OM growth 3Y2.06%
OM growth 5Y4.21%
PM growth 3Y-14.07%
PM growth 5Y-11.59%
GM growth 3Y1.51%
GM growth 5Y1.16%
F-Score6
Asset Turnover0.52
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.67 | ||
| Debt/FCF | 8.87 | ||
| Debt/EBITDA | 2.41 | ||
| Cap/Depr | 45.07% | ||
| Cap/Sales | 3.96% | ||
| Interest Coverage | 3.84 | ||
| Cash Conversion | 58.05% | ||
| Profit Quality | 150.81% | ||
| Current Ratio | 0.81 | ||
| Quick Ratio | 0.72 | ||
| Altman-Z | 2.04 |
F-Score6
WACC7.57%
ROIC/WACC0.88
Cap/Depr(3y)45.91%
Cap/Depr(5y)48.18%
Cap/Sales(3y)4.33%
Cap/Sales(5y)4.77%
Profit Quality(3y)155.2%
Profit Quality(5y)166.26%
High Growth Momentum
Growth
EPS 1Y (TTM)-8.19%
EPS 3Y5.61%
EPS 5Y8.12%
EPS Q2Q%-17.82%
EPS Next Y5.54%
EPS Next 2Y7.57%
EPS Next 3Y8.44%
EPS Next 5YN/A
Revenue 1Y (TTM)1.13%
Revenue growth 3Y22.51%
Revenue growth 5Y14.9%
Sales Q2Q%0.96%
Revenue Next Year11.94%
Revenue Next 2Y8.01%
Revenue Next 3Y6.88%
Revenue Next 5Y3.87%
EBIT growth 1Y1.17%
EBIT growth 3Y25.03%
EBIT growth 5Y19.74%
EBIT Next Year55.17%
EBIT Next 3Y21.26%
EBIT Next 5Y12.96%
FCF growth 1Y-11.98%
FCF growth 3Y4.71%
FCF growth 5Y9.66%
OCF growth 1Y-8.01%
OCF growth 3Y6.38%
OCF growth 5Y7.93%