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Rollins, Inc. (ROL) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Rollins, Inc. (ROL)

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Intrinsic Value (DCF)

Current$62.17
→
Intrinsic$31.67
-49%
$21.11$31.67$51.72
Current price reflects execution expectations above 19% growth — not unreasonable for quality businesses.
Range: Bear $21 → Bull $52. Current price implies expectations above the base case, closer to bull expectations.
Current price reflects assumptions at the upper end of our valuation range (bull case: $52).
Discount ↓Growth →15%17%19%21%
8%$39$42$46$50
10%$27$29$32$34
12%$20$22$24$26
14%$16$17$19$20

Bull Case

  • Bull case ($52) with 22% growth, 9% discount rate

Bear Case

  • Bear case ($21) implies 66% downside at 15% growth, 12% discount
  • Trading 49% above base case — execution must exceed assumptions to justify
  • Price exceeds bull case ($52) — requires exceptional execution
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5-Year Free Cash Flow Projection

Year 1$687.68M
Year 2$815.24M
Year 3$966.45M
Year 4$1.15B
Year 5$1.36B
Terminal$19.99B

📐 Model Inputs

Growth Rate18.5%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$580.08MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is ROL stock undervalued or overvalued?
🔴 OVERVALUED

ROL trades at $62.17 vs. our DCF-derived intrinsic value of $31.67, implying -47% downside. Using a 10.0% WACC and 18.5% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($47.95) suggests limited upside.

What is ROL's intrinsic value?

Using a 5-year DCF model: Base FCF of $580M, projected at 18.5% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $723M net debt and dividing by 0.48B shares: Bear $20.50 | Base $31.67 | Bull $47.95. Current price $62.17 implies -47% to base case.

How is ROL's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 18.5% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($16.06B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 27.7x.