Rollins: A 128-Bagger and Future Growth Ensured

Rollins (NYSE: ROL) continues to impress investors with a record return of 12,700% since 2000. The report highlights its market position, acquisition strategy, and reliable revenue growth, underscoring its potential for continued success in the pest control industry.

Date: 07-03-2025

AI Rating: 8

Investment Overview

Rollins has exhibited remarkable growth in the pest control sector, with total returns of 12,700% since 2000. The company benefits from non-discretionary sales, establishing a steady stream of revenue in the pest control industry. It has achieved nearly sixfold sales growth since 2000 and has outperformed the industry average due to its strong brand, Orkin, which has the highest brand awareness in the U.S.

Mergers and Acquisitions

Rollins has a successful track record in mergers and acquisitions, with a significant percentage of its free cash flow (FCF) allocated towards acquiring smaller pest control businesses. This strategy not only enhances market share but also provides Rollins with significant opportunities for future growth in a still-fragmented industry.

Profit Margins and Dividend Growth

The company has shown strong profitability metrics, reflecting its operational efficiency. Rollins has maintained an impressive cash return on invested capital (ROIC) of 34% since 2005, a figure that ranks it among the top 10% of S&P 500 stocks. Additionally, its dividend yield stands at 1.2%, demonstrating a commitment to returning value to shareholders while sustaining its growth trajectory.

Valuation Concerns

Though Rollins trades at a premium price-to-earnings (P/E) ratio of 55, the company historically justifies this premium due to its substantial free cash flow generation. Investors are advised to recognize that while the stock may carry a high valuation, its consistent performance and growth prospects may well warrant this premium.

Stocks: ROL