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Reasons Why a Hold Strategy is Apt for Rollins (ROL) Stock Now

·3-min read

Rollins, Inc. ROL has an impressive Growth Score of A. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.

The company’s earnings for 2022 and 2023 are expected to improve 7.4% and 7.8%, respectively, year over year. Shares have gained 4% in the past six months.

Rollins, Inc. Price

Rollins, Inc. Price
Rollins, Inc. Price

Rollins, Inc. price | Rollins, Inc. Quote

Factors That Auger Well

This leading pest and termite control services provider is benefiting from strength in all of its business lines. The company’s revenues increased 10.3% year over year in the first quarter of 2022, with all of its business lines — residential, commercial and termite — registering growth.

Acquisitions are a significant catalyst for Rollins’ business development, and are helping the company expand its global brand recognition and geographical footprint, along with boosting its revenues. During first-quarter 2022, the company completed eight buyouts. Over the last three years, Rollins completed almost 100 transaction deals, including 39 in 2021.

Rollins believes in returning capital through dividends. Consistent dividend payment underscores the company's commitment to shareholders and underline its confidence in business. The company paid dividends of $208.7 million, $160.5 million and $153.8 million in 2021, 2020 and 2019, repectively.

Rollins' current ratio (a measure of liquidity) stood at 1.03 at the end of first-quarter 2022, higher than 0.72 recorded at the end of fourth-quarter 2021 and the prior-year quarter’s 0.66. The gradually increasing current ratio bodes for Rollins as it implies that the risk of default is less.

Some Risks

Rollins’ margin stayed under pressure in the first quarter of 2021 due increase in labor- and fuel-related expenses. Adjusted EBITDA margin of 19.9% declined 116 basis points (bps) year over year.

Zacks Rank & Stocks to Consider

Rollins currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Business Services sector that investors can consider are Cross Country Healthcare CCRN and Avis Budget CAR, both sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Cross Country Healthcare has an expected earnings growth rate of 55.9% for the current year. CCRN has a trailing four-quarter earnings surprise of 29.2%, on average.

Cross Country Healthcare has a long-term earnings growth rate of 6.9%.

Avis Budget has an expected earnings growth rate of 74.7% for the current year. CAR delivered a trailing four-quarter earnings surprise of 102.1%, on average.

Avis Budget has a long-term earnings growth rate of 19.4%.

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