Rentokil Initial plc (RTO)
Valuation Overview•Is Rentokil Initial plc Overvalued or Undervalued?
Commands a peer premium multiple, but this multiple is justified by a strong intrinsic cash flow value.
Moderate quality score of 54/100, reflecting stable operating margins and manageable leverage.
Wall Street forecasts a balanced outlook with consensus price targets near the current price.
Verdict: Average quality business weighed down by significant profitability concerns.
Wall Street sentiment is generally neutral. This is paired with healthy capital returns, anchored by a strong, well-covered dividend yield.
RTO demonstrates adequate business quality with stable profitability. However, the balance sheet carries elevated leverage, requiring careful monitoring of debt servicing capabilities.
The company demonstrates solid revenue growth (11.4% 3Y CAGR) paired with stable bottom-line earnings. Operating efficiency remains adequate with margins around 10.7%.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $2.6B | -5.5% | +11.4% | +13.0% | +11.3% | |
| EBITDA | $565.6M | — | +25.0% | — | — | |
| Net Income | $208.5M | +13.9% | +14.6% | — | +10.9% | |
| EPS (Diluted) | $0.41 | +16.7% | +5.3% | +7.0% | +7.5% | |
| Free Cash Flow | $298.4M | +12.8% | +11.4% | +8.4% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 13.5% | 36.6% | 32.1% | 44.7% |
| Operating Margin | 10.7% | 11.8% | 11.1% | 11.2% |
| Net Margin | 6.2% | 6.5% | 6.9% | 8.4% |
| FCF Margin | 10.2% | 10.1% | 11.0% | 10.6% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q1'26Latest | $0.70 | $0.65 | -7.1% | ||
| Q3'25 | $0.65 | $0.51 | -22.5% | ||
| Q1'25 | $0.63 | $0.27 | -56.4% | ||
| Q4'24 | $0.71 | $0.49 | -30.6% | ||
| Q2'24 | $0.71 | $0.49 | -30.9% | ||
| Q2'23 | $0.68 | $0.46 | -32.1% | ||
| Q1'23 | $0.53 | $0.30 | -43.1% | ||
| Q2'22 | $0.54 | $0.40 | -25.0% |
Total return is +25.3% (1Y), outperforming the benchmark by +0.3%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | -3.3% | -12.6% | — |
| 1Y | +25.3% | +0.3% | +2.7% |
| 3YCAGR | -9.2% | -28.2% | +4.3% |
| 5YCAGR | -1.8% | -14.6% | +7.7% |
| 10YCAGR | +9.6% | -3.9% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Rentokil Initial plc (RTO) valuation, health, and returns.
Rentokil Initial plc is estimated to be undervalued under our discounted cash flow framework. relative multiples indicate the stock is Slightly expensive versus peers compared to industry peers. undervalued (implying +326.0% upside to DCF intrinsic value of $121.33)
Rentokil Initial plc has multiple valuation anchors: DCF Intrinsic Value: $121.33 | Peer Relative Fair Value: $25.79 | Wall Street Analyst Target: $29.00 (implying +1.8% upside). A convergence of these signals offers higher conviction.
Rentokil Initial plc displays fair financial health with a composite quality score of 54/100, supported by a Altman Z-Score of 3.1 (safe zone), Piotroski F-Score of 6/9, Return on Invested Capital (ROIC) of 7.3%.
Rentokil Initial plc pays a 2.1% dividend yield, covered by a 65% payout ratio with 4 years of growth, supplemented by a 0.0% buyback yield.
Rentokil Initial plc's current growth trajectory is Decelerating. The company achieved -5.5% 1Y revenue growth and +16.7% 1Y EPS growth, compared to its 3Y revenue CAGR of +11.4%.
Wall Street consensus is Buy based on 6 analysts, beating EPS expectations in 0% of recent quarters with a -12-quarter streak. The consensus price target represents a +1.8% change from current levels.
Investment risks for Rentokil Initial plc include: -17.5% 1-year max drawdown. Volatility risk is characterized by a beta of 0.74x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.