Rollins Inc (ROL)

Conclusion

Rollins Inc provides pest and wildlife control services to residential and commercial customers in the United States and abroad, serving clients directly and through franchisees. At a price of 38.74 USD on 2026-11-09, the market capitalisation is 18.6 billion USD.

The verdict is fair. Today's P/E of 35.4x sits below its ten-year median of 53.9x, and the EV/EBITDA of 22.8x sits below its median of 31.9x, yet the DCF gives 32.64 USD per share, below the price. The fair value band runs from 35.18 to 52.77 USD with a midpoint of 43.98 USD, a margin of safety of 13.5%. The reverse DCF implies revenue growth of 10.2% a year, against 11.7% revenue growth delivered over five years, so the price asks for slightly less growth than the company has achieved.

What holds the case up is the return on capital: ROIC of 23.0% against a WACC of 8.6%, and an Altman Z-score of 7.77. Free cash flow conversion of 127.7% over the last twelve months also supports reported earnings. What could break it is the current ratio of 0.62, the downward estimate revisions with no upward revisions in the last 30 days (17 for the current year, 19 for the next), and an average earnings surprise of -1.1% over eight quarters, with four misses.

Financial health

Financial health is yellow, held up by a net debt to EBITDA of 1.16x, interest coverage of 20.1x and an Altman Z-score of 7.77, and pulled down by a current ratio of 0.62. The quick ratio is 0.44 and debt to equity is 0.81. The Altman Z-score of 7.77 sits in the safe zone, though the Altman model was designed for manufacturers, and this is a services company. Insolvency risk is low, about 0.7% by the estimate of the Ohlson model over one to two years. The current ratio and quick ratio both sit below one, which means current liabilities exceed liquid assets, and the company relies on its operating cash flow to meet short-term obligations.

Earnings quality

Earnings quality is green. Free cash flow conversion is 127.7% on a trailing twelve-month basis and 117.8% over five years. The accrual ratio is -5.1%, which points to cash earnings exceeding accounting profit. Stock-based compensation is 0.5% of revenue, and free cash flow after it is 651.7 million USD. The share count fell at a five-year compound rate of 0.3%, which reflects buybacks. The Piotroski score is 6 out of 9. The Beneish M-score is not available. Over the last eight quarters, the company beat estimates once and missed four times, with an average surprise of -1.1%. Estimates have been cut: the current-year estimate fell 2.4% over 90 days and the next-year estimate fell 5.9%.

Profitability

Profitability is green. The gross margin is 51.4% against a ten-year median of 51.5%, the operating margin is 18.3% against 19.1%, and the net margin is 13.2% against 13.2%. The operating margin has moved by 7.7% over the period, a stable pattern. ROIC is 23.0% against a WACC of 8.6%, and the given ROIC minus WACC spread is 14.4%, which the model labels as creating value. The five-year median ROIC is 23.7%. Return on equity is 37.8%. The DuPont split for 2025 shows a net margin of 14.0%, asset turnover of 1.20x and an equity multiplier of 2.29x, so a substantial part of the return on equity comes from leverage, though the returns on the assets themselves are strong.

Growth

Growth is green. Revenue grew at a compound rate of 11.7% over three years, 11.7% over five years and 9.7% over ten years. Earnings per share grew at 13.3% over three years, 14.9% over five years and 13.4% over ten years. Revenue rose in all ten of the last ten years. Free cash flow per share compounded at 15.0% over three years and 9.9% over five years. The next-year earnings estimate implies growth of 8.1%, which is slower than the historical pace.

Valuation

Valuation is yellow, with a neutral assessment from the fair value band. Against their own ten-year medians, today's multiples are lower: P/E is 35.4x against 53.9x, a premium of -34.3%; EV/EBITDA is 22.8x against 31.9x, -28.6%; price to free cash flow is 27.7x against 42.8x, -35.1%; price to sales is 4.7x against 6.7x, -30.0%; and price to book is 13.4x against 17.2x, -22.2%. The DCF gives 32.64 USD per share, using a discount rate of 8.9%, a first-stage growth rate of 9.7% and a terminal growth rate of 2.5%. The terminal value makes up 58.7% of the DCF. The fair value from historical multiples is 55.32 USD. The fair value band is an estimate built on fixed assumptions, not a price target. The reverse DCF implies growth of 10.2%, against revenue growth of 11.7% and free cash flow per share growth of 9.9% over five years. The dividend yield is 1.9%, the forward yield 2.1%, and the payout on free cash flow 52.3%.

Risks

The current ratio of 0.62 means short-term obligations depend on steady operating cash flow. A slowdown would therefore hit liquidity before it hit solvency, which the Altman Z-score of 7.77 suggests is unlikely in the near term. Falling estimates, with 36 downward revisions and no upward ones across the two years, would reduce the earnings base on which the fair value band rests. Four earnings misses in eight quarters point to forecasting weakness. Because 58.7% of the DCF value sits in the terminal value, a change in the 8.9% discount rate or the 2.5% terminal growth rate would move the result considerably. The price has moved sharply within the year, from 63.34 USD in January 2026 to 30.12 USD in September 2026, before recovering to 38.74 USD. This analysis does not include a debt maturity schedule or revenue by segment, so refinancing risk and the mix of revenue cannot be assessed.