Rentokil vs Rollins: Counting Clicks 2Q26

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Rentokil vs Rollins: Counting Clicks 2Q26

Global IdeaMtwo years, with slower organic growth prints vs the market/peers and downward

earnings revisions. The second half of 2025, however, appeared to mark a turning

point in terms of NA organic growth recovery, with a sequential improvement

implying that the strategic changes management put in place earlier in the year are

beginning to deliver benefits. In our view, the worst of the downgrades are now

behind us, and we see significant potential value to be unlocked over the medium

term as Rentokil delivers significantly better growth, margins and cash conversion.

An ongoing improvement in North America organic growth through 2026 should

give the market more confidence in ongoing execution of the strategic turnaround,

and drive a re-rating. For Rollins, we are Overweight with a $65 PT. We view ROL

as a best-in-class business services stock with resilient end-market demand for pest

services, a fragmented end market, durable growth drivers, strong secular tailwinds,

and a highly macro (and AI) resilient end market. Structural deficiencies in the

availability of labor in trades create supply shortages that provide ROL with durable

pricing power. We expect these drivers to allow ROL to continue its industry-leading

revenue and EBITDA growth and outperformance vs. peers. We expect ROL to grow

at a 7% organic revenue CAGR through '28 and an 11% EBITDA CAGR, continuing to

lead the industry. Shares traded lower YTD, due to weather impacting 4Q/1Q results

and to the departure of the CFO, which we believe is overdone. ROL currently

trades slightly below its historical NTM EV/EBITDA and NTM P/E ratios despite

having a stronger growth and margin profile, which we view as an attractive