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Reasons Why Hold Strategy is Apt for Rollins (ROL) Stock Now

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Rollins, Inc. (ROL - Free Report) has an impressive Growth Score of A. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth. The stock has had an impressive run over the past year, appreciating 15%.

The company’s earnings for 2024 and 2025 are expected to increase 12.2% and 10%, respectively, year over year. ROL has a long-term (three to five years) expected earnings growth rate of 13%.

Factors That Augur Well

The demand environment for this leading pest and termite control services provider is currently in good shape across all its business lines. Revenues increased 13.7% year over year in the first quarter of 2024. Business lines — residential, commercial and termite — registered 16.5%, 11.4% and 11.7% growth, respectively.

Rollins has developed its operating platform in a way that increases cross-selling opportunities and cost efficiency and facilitates swift customer service delivery. The company’s real-time service tracking and customer Internet communication technologies have increased its competitive advantage.

Its proprietary Branch Operating Support System facilitates service tracking and payment processing for technicians and provides virtual route management tools to increase route efficiency across the network, enabling cost reduction and increasing customer retention through quick response service.

Consistent dividend payment underscores the company's commitment to shareholders and underlines its confidence in business. It paid dividends of $264.3 million, $211.6 million and $208.7 million in 2023, 2022 and 2021, respectively.

A Risk

Rollins’ current ratio (a measure of liquidity) at the end of the first-quarter was pegged at 0.72, lower than the year-ago quarter's 0.79. A current ratio of less than 1 indicates that the company may have problems paying off its short-term obligations.

Zacks Rank & Stocks to Consider

Rollins currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector are Booz Allen Hamilton (BAH - Free Report) and SPX Technologies, Inc. (SPXC - Free Report) .

Booz Allen Hamilton has a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BAH has a long-term earnings growth expectation of 14%. It delivered a trailing four-quarter earnings surprise of 12.5%, on average. 

SPX Technologies, Inc. currently flaunts a Zacks Rank of 1. It has a long-term earnings growth expectation of 18%. SPXC delivered a trailing four-quarter earnings surprise of 13.9%, on average.


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