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Rentokil Initial PLC ADR RTO

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Stock XNYS Rating as of
$29.40 −0.07 (0.24%)
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As of Delayed Price Pre-Open: $29.84 +0.44
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Company Report

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Rentokil: Activist Stake Indicative of Latent Shareholder Value; Shares Still Appeal

Grant Slade

Shares in Rentokil Initial remain appealing despite the pronounced stock price response to news that activist investor Nelson Peltz has acquired a significant stake in the wide-moat pest control name. Peltz’s investment firm, Trian Partners, disclosed that it is now one of Rentokil’s top 10 shareholders, sending shares some 12% higher in early trade on June 12. We think Peltz’s investment underscores the extent to which investors remain overly pessimistic regarding Rentokil’s longer-term prospects, having overreacted to the business’ recent underperformance. We continue to see upside, with the stock still trading at a 25% discount to our unchanged GBX 620/USD 39.50 fair value estimate.

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Price vs Fair Value

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RTO is trading at a 762% premium.
Price
$29.40
Fair Value
$13.50
Uncertainty
Medium
1-Star Price
$91.29
5-Star Price
$63.56
Economic Moat
Ghzsr
Capital Allocation
Ttvqnthls

Bulls Say, Bears Say

Bulls

Rentokil is well positioned to benefit from fast-growing Asian pest-control markets.

Bears

Currently, heightened hygiene awareness may not yield permanently higher growth for the health and wellness business.

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News

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Trading Information

Previous Close Price
$29.47
Day Range
$29.01–29.41
52-Week Range
$23.39–41.55
Bid/Ask
$29.83 / $29.87
Market Cap
$14.77 Bil
Volume/Avg
8,764 / 590,305

Key Statistics

Price/Earnings (Normalized)
22.87
Price/Sales
2.22
Dividend Yield (Trailing)
1.89%
Dividend Yield (Forward)
1.89%
Total Yield
1.89%

Company Profile

Rentokil Initial is the largest global provider of route-based pest-control and commercial hygiene services, operating in 83 countries. The group also offers a range of specialist route-based services including office and commercial space plant care, property care, and workwear rentals. The group has a diverse client base that includes global food producers, hotel chains, industrial goods businesses, restaurants, and individual residential customers.
Sector
Industrials
Industry
Specialty Business Services
Stock Style Box
Mid Growth
Total Number of Employees
63,551
Website
https://www.rentokil-initial.com

Competitors

Valuation

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Metric
RTO
ECL
ROL
Price/Earnings (Normalized)
 22.8741.5653.43
Price/Book Value
 2.838.2020.39
Price/Sales
 2.224.367.58
Price/Cash Flow
 13.9028.0142.09
Price/Earnings
RTO
ECL
ROL

Financial Strength

Metric
RTO
ECL
ROL
Quick Ratio
 0.950.930.55
Current Ratio
 1.051.410.72
Interest Coverage
 3.486.1123.59
Quick Ratio
RTO
ECL
ROL

Profitability

Metric
RTO
ECL
ROL
Return on Assets (Normalized)
 5.14%7.56%17.78%
Return on Equity (Normalized)
 14.43%20.92%37.09%
Return on Invested Capital (Normalized)
 7.92%11.24%24.42%
Return on Assets
RTO
ECL
ROL
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