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Rentokil Initial plc (RTO)
Intrinsic Value (DCF)
Current$31.23
→
Intrinsic$18.02
-42%
$10.28$18.02$32.74
Market implies 27% growth for 5 years
Current price reflects execution expectations above 15% growth — not unreasonable for quality businesses.
At $31, the market prices in continued strong cash flow growth (27%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $10 → Bull $33. Current price implies expectations above the base case, closer to bull expectations.
| Discount ↓Growth → | 11% | 13% | 15% | 17% |
|---|---|---|---|---|
| 8% | $23 | $26 | $28 | $31 |
| 10% | $14 | $16 | $18 | $20 |
| 12% | $10 | $11 | $12 | $14 |
| 14% | $7 | $8 | $9 | $10 |
Bull Case
- Bull case ($33) offers 5% upside at 18% growth, 9% discount
Bear Case
- Bear case ($10) implies 67% downside at 12% growth, 12% discount
- Price reflects 27% growth expectations vs 15% historical — high bar to clear
- Trading 42% above base case — execution must exceed assumptions to justify
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5-Year Free Cash Flow Projection
Year 1$584.20M
Year 2$673.15M
Year 3$775.65M
Year 4$893.75M
Year 5$1.03B
Terminal$15.15B
📐 Model Inputs
Growth Rate15.2%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$507.00MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.