Rollins operates as an international services company, offering comprehensive pest and wildlife control solutions along with protection against termite damage, rodents, and insects. Their services cater to a vast clientele exceeding 2.8 million, spanning residential and commercial sectors across the United States, Canada, Australia, Europe, Asia, Central and South America, the Caribbean, Europe, the Middle East, and Africa. With a robust presence established through over 800 company-owned and franchised locations across approximately 70 countries, Rollins has strategically positioned itself on the global stage. While their international footprint is significant, the United States constitutes their primary market, generating 93% of their total revenues. Moreover, emerging opportunities are discernible in regions such as Canada, Australia, and the United Kingdom, indicating sustained growth prospects over the years.

Rollins operates via three business lines:

  • Residential (45% of turnover): Pest control services protecting from common pets, rodents, insects and wildlife
  • Commercial (34% of turnover): Workplace pest control solutions in diverse markets such as healthcare, foodservice, logistics…
  • Termite (20% of turnover): Protection and ancillary services for residential and commercial customers

The company's origins date back to 1964 when brothers O. Wayne and John Rollins acquired the Orkin Exterminating Company, subsequently rebranding it as Rollins in 1965. Merely three years later, in 1968, the company made its debut on the New York Stock Exchange, a milestone that has since been marked by the establishment of a diverse portfolio comprising industry-leading brands, including Orkin, HomeTeam Pest Defense, Clark Pest Control, Western Pest Services, Critter Control Wildlife, and Northwest Exterminating, among others.

The company's strategic trajectory heavily emphasizes acquisitions. Over the past three years, Rollins made more than 100 acquisitions, with 31 in the year 2022 alone. Noteworthy acquisitions include Safeguard in 2016, Northwest in 2017, Aardwolf in 2018, and Clark in 2019, underscoring their commitment to strategic expansion.

In the pest control industry, spring and summer emerge as pivotal seasons due to the heightened presence of pests. Rollins, in its pursuit of operational good performances, relies on a dedicated workforce of 17,515 employees, indicating a 12.1% increase compared to 2020.

Maintaining a competitive edge in this industry mandates navigating great rivals such as Rentokil (with a Market Cap of $18 billion), Ecolab (with a Market Cap of $48 billion), and Anticimex. The industry's competitive landscape introduces inherent risks, where fluctuating revenues and earnings are influenced by competitor pricing and broader economic factors. The business is susceptible to weather conditions, given the seasonal nature of pest and termite control. Factors such as catastrophic events and natural disasters pose additional challenges. In the context of growing environmental concerns, including climate change, alterations in rainfall patterns and water scarcity could potentially impact the company's costs and overall business operations.

The group's sales have steadily increased from $1,412 to $2,696 billion from 2014 to 2022, showing a consistent annual growth rate of 6.7%. This positive trend extends to EBITDA and EBIT, which have risen by 126% and 125% respectively over the same period, reaching $593 and $493 millions. The management's effectiveness is evident in the expanding net and operating margins, projected to rise from 13.7% to 15.7% and 18.3% to 20.9% from 2022 to 2025. Additionally, a robust Free Cash Flow (FCF) of $435 million in 2022 is set to increase to $651 million in 2025, enhancing the company's potential for future acquisitions (one of its major strategies).

Currently, its P/E is 48.7 times this year's earnings and 34.7 times projected earnings for 2025, compared with a 10-year average earnings valuation of 42.7 times, making the stock slightly more expensive than its average. Sales, meanwhile, are set to continue their upward trend without any downturn, while operating margins and net margins remain very healthy.

Rollins has successfully positioned itself in a highly competitive market, rapidly attracting a wide range of customers worldwide. The company's offer is diversified. Margins remain high, and future growth will depend mainly on management's ability to offer attractive prices for a high-quality service.