Why Is Rollins (ROL) Down 4.4% Since Last Earnings Report?
It has been about a month since the last earnings report for Rollins (ROL). Shares have lost about 4.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Rollins due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Rollins Q2 Earnings Meet Estimates
Rollins reported second-quarter 2023 adjusted earnings of 23 cents per share, which matched the Zacks Consensus Estimate and increased 15% year over year.
Revenues of $820.8 million beat the consensus mark by 2.1% and improved 14.9% year over year. Organic revenues of $769.6 million increased 7.7% year over year.
Rollins’ performance in the quarter was positively impacted by a healthy demand environment for its services. The company remained focused on improving the efficiency of its business model and adding customers. Its acquisitions pipeline remained strong in the quarter.
Quarter Details
Residential revenues increased 18.5% year over year to $385.6 million and beat our estimate of $357.9 million. Commercial revenues increased 10.9% year over year to $260 million but missed our estimate of $272.5 million. Termite and ancillary revenues increased 13.7% year over year to $166.8 million and beat our estimate of $160.6 million.
Adjusted EBITDA of $183.3 million increased 15.1% year over year. This compares to our expectation of an adjusted EBITDA of $172.2 million, up 8.2% year over year. Adjusted EBITDA margin of 22.3% remained flat year over year. This compares with our expectation of an adjusted EBITDA margin of 21.5%, down 80 basis points year over year.
Rollins exited the quarter with a cash and cash equivalents balance of $154.7 million compared with the prior quarter’s $112.5 million. Long-term debt at the end of the quarter was $337.5 million compared with $62.4 million at the end of the prior quarter.
The company generated $147 million of cash from operating activities in the quarter and capital expenditure was $7 million. Free cash flow came in at $141 million. The company invested $312 million in acquisitions and paid dividends worth $64 million in the quarter.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
Currently, Rollins has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Rollins has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Rollins, Inc. (ROL) : Free Stock Analysis Report
