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Even at this low SP,rentokil is still on a PE of 24...To justify that high rating the company needs to show very fast revenue growth..However growth was a meager 1.5%....Around £3.80 seems a reasonable SP
Slightly disappointing RNS this am, organic growth 4-6% everywhere except NA where integration and a stronger than anticipated £ has impacted. I am happy to hold , expecting both to change over the next 2 quarters. Recent figs suggest UK will reduce rates before US (and hence£ FX rate will fall), US housing market is likely to recover sharply and also RTO's US integration will start to bear fruit. Still comfortable with an estimate of >£5bill revenue and PTP of ~£700m. Looking for a forward P/E in the teens and an SP of ~600p before I consider selling .
Every single time a company's SP drops the comments refer to jam tomorrow senario..
Still it is growth +£1.29bn +4.9%. Don't know how the market will take it? Will come good later in the year. GLA
Let’s hope the news is good in the morning. Bounced above 500 p a few weeks ago on last update , positive news and I think we will get there again and more . On the downside anything negative and we are sub 400 p.
If we look qtrly at sales for booth companies 2023
RTO £m Rollins $US Total Company
US only
Q1 £745m $658m
Q2 £901m $821m
Q3 £870m $840m
Q4 £798m (-£72m or $754m (-$86m on Q3
$90m US
FY £5375m Up +50% $3073m +13%
Mkt Cap $US14.3BN Mkt Cap US$23bn +50% of RTO
RTO marked down £4.3bn Mkt cap, when Q4 sales total for RTO were £1,322m v Q3 £1,382 down -4.4% compared to -10.3$ for Rollins - the rop $840m to $754m -$86m Qtr on Qtr. Something going on here, I know Rollins ROCE is far higher but they are a global minnow, RTO have 10% pa +£bn golbal sales worldwide footprint which takes years to achieve. Are we getting set up for a cheap TO!!! GLA Watch Tmz we come i
I just wonder whether RTO should just move to the US Stock Market, as this mark down is boxxxxxks.
Are we getting set up for a cheap PE deal?! Watch tmz
BarnyB, it looks like the market is extremely sceptical about RTO 2024 prospects, especially with the constant SP mark downs. What I fail to understand is the FT forecast or consensus sales to RTO 2024 is £5.51bn, a 2.5% uplift from 2023 £5.375bn. The sales target for Q1 would be £1,378bn compared to Q1 2023 £1.26bn. Europe/Asia/Pacific are all at +10% growth, as you say US market will receive far more attention and hopefully attract +2% organic sales Q1. The shares have been marked down 30%, which seems very harsh.
IMO I think the market forgets the potential of this powerhouse of a business. The potential for margin improvement is extremely material in EPS terms. Rollins recently stated US trading was going well in April. I would be very surprised and disappointed if RTO failed to hit £1.36-1.37bn TO Q1 - a +7% increase on a low Q1 2023. What do I know?! GLA We'll soon find out.
RIGHT WAY 2 plan to reinvigorate organic growth in North America. Increased Terminix synergies enables the plan to be accompanied by an additional c.$25m of investment in sales and marketing. We expect Organic Revenue growth in North America to be c.2% in Q1 and between 2-4% in the full year.
Let’s hope Right way 2 plan is working and we are north of the promised 2%.
Agreed seems to the steadied , hopefully climb back above 500 p pre results then hopefully a leg up. Brokers seem happy
Starting to firm up now after the results sell off, missed £4.61, was fully loaded elsewhere. Hopefully a rise now to Q1 24 18th April, won't be long excluding Easter. GLA
Totally agree, marked down early Jan 24 as a side swipe throw away memo, utter useless. This is a powerhouse combination as it matures. You can't swallow a whale without breaking a few eggs!? Will load up on weakness, US tailwinds will kick in later in the year- on all fronts (Except Trump). GLA
I sold at nearly £5 yesterday on the basis it was inevitable there would be some more profit taking today. I will buy in again if it drifts down again. So many analysts are useless. I really do wonder how they come up with their assessments sometimes. It was only a few weeks ago they were trashing the Terminex aquisition stating it was too expensive and would be a drain. Now the results show a far more positive story. This share a pretty safe growth stock in my view, but there's more opportunity to buy on weakness and do the same again.
Overhead supply from previous trading at 500 and 550. There is a falling down trend line at 550, which together with overhead supply, msy be expected to provide initial resistance to a rally.
The latest complete trading day , represents a Japanese spinning top candlestick, with the high and low of that trading day representing the levels at which RTO, can be expected to either rise further beyond the high , or fall below the low. Volatility based bollinger bands are separating, confirming higher volatility than normal.
Looks like its heading for 200 DMA £5.22, I did add after initial sell - in the £4.90's , a lot of momentum here and I feel cheeky I added in the US last week, (only modestly) but thank God. GLA - long time coming here - had to wait and didn't like the pre Mkt drop last few days, always makes you think, is there something....?? As with the others - thought this was an overkill mark down after H1 - took Rollins 14th Feb to clarify a better view.
That took the bait at 400p level. Could have been a bear trap but looks to have worth a nibble. Those that rode into town at that price have done well here buy I still have a feeling there is some cheese still to be had here despite the rise.
After today’s update I think it is only a matter of time before we climb back towards 600p. Great stuff
Agreed Gogetum &Leew - fingers crossed. Looks like their US recovery plan has teeth and US Int Rates will decline in 2024-25 so strong tailwinds ahead next 18 mths- hopefully. GLA
Same here and I would hope after further updates they will climb to the 600p mark again,
The management presentation later this morning will possibly provide a further uptick
I did the same, got some between 395-420 as never understood the reaction last year so hopefully can ride with it back to the previous levels, which will hopefully see a 40-50% return on the investment.
Feeking hell - built up here in the darkness - normally get it wrong, out for grub now HNY.
RTO adr up 4.87% probably waiting for this.
2023 Fourth Quarter Highlights
• Revenues increased 14% to $754 million. Organic revenues* increased over 7% and acquisition-related revenue increased approximately 7%.
• Operating income increased 16% to $139 million. Operating margin increased 30 basis points to 18.4% of revenue. Adjusted operating income* increased 20% to $144 million. Adjusted operating income margin* increased 100 basis points to 19.1% of revenue. Adjusted EBITDA* increased 14% to $167 million. Adjusted EBITDA margin* was 22.1%, flat versus last year due to lower non-operational gains included in other income associated with vehicle and property sales.
• Net income increased 29% to $109 million. Adjusted net income* increased 20% to $101 million.
• EPS increased 29% to $0.22 per diluted share. Adjusted EPS* increased 24% to $0.21 per diluted share.
• Operating cash flow increased 24% to $153 million. During the quarter, the Company invested $18 million in acquisitions, $11 million in capital expenditures, and paid dividends totaling $73 million.
• The underlying health of core pest control markets, as well as Rollins' ongoing commitment to operational execution, should support another year of strong organic growth, further complemented by a strategic and disciplined approach to acquisitions. As we look to 2024, demand for our services is solid and our pipeline for acquisitions is robust.
See what 7th Mar brings but no structural issue with the US Market. GLA
I've been watching this share for a while. I don't really understand the magnitude of the 35% SP collapse from 610p to 396p, when the disappointment of the Oct TU points to some margin pressure in the US. Taking a step back, this SP fell 42% in the COVID pandemic Feb - Mar 20, for understandable material reasons, from 505p to 289p.
The US margin set back is NOT a China property related structural collapse. Growth elsewhere in the RTO global markets is progressing positively and will offset the US to a point. RTO appear confident in the 2023 FY result.
The RTO business model is inflation proof and does not require long lead time massive capital expenditure in manufacturing. Admittedly the PE ratio was lofty but now has fallen back to below the sector average. IMO DYOR, RTO is in a far stronger trading position than 2 years ago and will reap synergy benefits in 2024 with the Terminix acq'n and a vastly improving US & Global interest rate and inflationary trading environment.
IMO I think the majority of the downside is in the current SP (barring a complete meltdown in trading), if it came thru Covid relatively unscathed, then this is just a short term blip. Fingers crossed I'm in. GLA FWIW. News 7th Mar & TU Q1 18th Apr - not long.
Disappointing to see this slowly drift downwards. I must say it looks a tempting entry point, or in my case, averaging down.
Maybe the market is still uncomfortable about the price they paid for the most recent USA aquisition. Surely this is still a sound investment.
Hi all, been at this caper a long while but never ventured into Rentokil, I'm an in and out merchant and bought at 412 yesterday, cheers.
Casa. Good post. Agree. Have bought more today to average down. My purchase showing as a sale.