Rollins: Financial Targets Fail to Excite Already Exuberant Equity Market at 2024 Investor Day
We retain our $35 fair value estimate for wide-moat Rollins with the group unveiling no major changes in its strategic priorities at its 2024 investor day. Rollins outlined key pest market segments and verticals it will target—aimed at maintaining strong organic growth through the medium term—and opportunities to support its favorable position on the pest control industry cost curve. Rollins expects the execution of its strategy to perpetuate strong earnings growth for the group, as guided to in the group’s upbeat medium-term outlook. Nonetheless, Rollins shares eased in early trade—down about 2% of the time of writing—with the group’s mid- to high-single-digit organic growth target likely acting as a reminder to investors that the impressive top-line performance of the business in recent years may prove challenging to replicate long term. Rollins shares remain significantly overvalued, in our view, trading at a steep 32% premium to our unchanged fair value estimate.