I kind of forgot about Rollins because it has been trading at a premium for so long. I randomly stumbled on them again and noticed their stock price had fallen over 25% since the last time I checked.
Rollins is a market leader in Pest and wildlife control, but also protects residential and commercial clients. It serves clients directly, as well as through franchisee operations.
It is a bit of a typical, boring yet effective and well-managed compounder.
They have excellent reputation, and a strong balancesheet. They have organic growth, strong ROE and ROIC, and maintenance capex under 1% (yeah, this is a full analysis)
When I analysed their stock price around the beginning of May, I noted that to justify a 54$ share, the company had to aim for at least 12% FCF growth rate and 3.5% terminal. Not impossible, but too bullish for my style - so I set a reminder at a conservative 40$ and forgot about them.
What caused the company to crash was a sudden CFO resignation, but also - and to me more worrying, although less discussed - the Federal Trade Commission (FTC) finalised a consent order in June 2026 that forced Rollins to stop enforcing non-compete agreements for more than 18,000 employees.
Today, Rollins traded at 44.5$ a share, which required a more reasonable 9% FCF growth. The valuation is still high at 40 PE, 34 P/FCF and 26EV/Ebitda, but it is all relative to the company's historical valuation.
So what is your opinion on the company ? Personally, I had set an alert at under 40 (which I closely missed as they traded at 41 a week ago), but this FTC consent order adds significant risk, and I need further margin of security to feel comfortable enough, so I lowered under 38$ a share (ideally, I'd aim under 36$. 38 is just a reminder).