It's been a good week for Rollins, Inc. (NYSE:ROL) shareholders, because the company has just released its latest first-quarter results, and the shares gained 4.9% to US$40.00. Results overall were respectable, with statutory earnings of US$0.13 per share roughly in line with what the analysts had forecast. Revenues of US$488m came in 2.2% ahead of analyst predictions. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the four analysts covering Rollins provided consensus estimates of US$2.03b revenue in 2020, which would reflect a measurable 2.1% decline on its sales over the past 12 months. Statutory earnings per share are predicted to increase 3.6% to US$0.64. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.02b and earnings per share (EPS) of US$0.64 in 2020. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The analysts reconfirmed their price target of US$37.00, showing that the business is executing well and in line with expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Rollins at US$43.00 per share, while the most bearish prices it at US$30.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Rollins' past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast revenue decline of 2.1%, a significant reduction from annual growth of 7.2% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 2.6% next year. It's pretty clear that Rollins' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$37.00, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Rollins going out to 2024, and you can see them free on our platform here.
It might also be worth considering whether Rollins' debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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