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Rollins, Inc. (NYSE:ROL) Third-Quarter Results: Here's What Analysts Are Forecasting For Next Year

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Simply Wall St
·4 min read
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Last week saw the newest quarterly earnings release from Rollins, Inc. (NYSE:ROL), an important milestone in the company's journey to build a stronger business. The result was positive overall - although revenues of US$584m were in line with what the analysts predicted, Rollins surprised by delivering a statutory profit of US$0.24 per share, modestly greater than expected. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Rollins

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the consensus forecast from Rollins' four analysts is for revenues of US$2.29b in 2021, which would reflect a credible 7.5% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to increase 6.3% to US$0.81. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.28b and earnings per share (EPS) of US$0.85 in 2021. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$50.33, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. There are some variant perceptions on Rollins, with the most bullish analyst valuing it at US$56.00 and the most bearish at US$47.00 per share. This is a very narrow spread of estimates, implying either that Rollins is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. Next year brings more of the same, according to the analysts, with revenue forecast to grow 7.5%, in line with its 7.8% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 6.0% per year. So although Rollins is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Rollins analysts - going out to 2024, and you can see them free on our platform here.

You can also view our analysis of Rollins' balance sheet, and whether we think Rollins is carrying too much debt, for free on our platform here.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.