Summary: OVERPRICED
Score: 10/20
MOS: -441%
Share Price: $54
Sticker Price: $10
Is Rollins a good buy?
ROL provides essential pest control services and protection against termite damage, rodents and insects to more than two million customers in North America, South America, Europe, Asia, Africa, and Australia from more than 700 locations.
Their brands include Orkin, HomeTeam Pest Defense, Clark Pest Control, Orkin Canada, Western Pest Services, Northwest Exterminating, Critter Control, The Industrial Fumigant Company, Trutech, Orkin Australia, Waltham Services, OPC Services, PermaTreat, Rollins UK, Aardwolf Pestkare, and Crane Pest Control.
Rollins has been labeled a “serial acquirer.” When a competitor grows big enough, ROL will acquire and maintain the brand but the financials roll into the Rollins parent brand. In other words, ROL has a wide moat and not a lot of large competitors. This is a great business model!
Unfortunately, when you look at the history of the stock, it remained relatively flat between 2018 and March of 2020. The stock would rise and fall between the prices of $32 and $42 but it never really broke out until March of this year. On March 1, the stock began a rapid ascend from $36 up to $54. A 50% return in just a few months.
Although ROL has a wide moat, the financials are too much of a risk. The score of 10/20 isn’t bad but the share price of $54 vs the sticker price of $10 means this stock could nose dive. Maybe keep this stock on your watchlist. If the financials can improve, it would be great to see the sticker price rise above the share price.
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