Rollins: Consistency in Focus Despite High Valuation

Rollins, known for its prominent Orkin brand, continues to assert its leadership in the U.S. pest control industry. Despite frequent comments about being overvalued, the company has delivered impressive returns for its investors. A headline from 2015 warned of inflated prices, but since then, the stock value has more than quadrupled for investors. Observers were also skeptical in 2019, labeling Rollins as an "expensive company." Yet, since then, the stock's value has doubled again. Currently, the valuation is at 43 times free cash flow (FCF), significantly above the S&P 500 average of 32. Nonetheless, it's unclear if Rollins can expect similar growth by 2029. The long-term resilience of Rollins, bolstered by its unwavering services, suggests a promising future. If the company can carry its successes from the past 20 years into the coming decades, purchasing its stock could remain a rewarding investment, regardless of price. The recently decreased stock following the quarterly results appears to remain attractive for some analysts, despite the high valuation. Here are the three main reasons why Rollins might be worth continuous investment. Rollins serves over 2 million customers in more than 70 countries, maintaining its indispensable status in the global pest and wildlife control market. With a market volume of 20 billion dollars, the company already leads the way, and the future could be even more promising. **Enduring Strength in a Stable Sector** A key factor in the high valuation of Rollins' shares is the stable nature of the pest control industry. Over the past decade, the American market has grown by an average of only 4% annually but remains largely crisis-resistant, unless a catastrophic event occurs. Rollins has shown an annual revenue growth of 7% over the last 15 years, even in financially critical times such as the Great Financial Crisis, Industry Downturn of 2015, and the COVID-19 pandemic, during which revenues increased by 6%, 6%, and 12%, respectively. Approximately 80% of the revenue comes from recurring business, granting Rollins a certain degree of independence from economic fluctuations.