- Price
- $33.78
- Fair value
- $46.00
- Discount
- 26.6%
- Uncertainty
- Medium
- LSEG rating
- 2.75
- Moat
- Wide
- Next earnings
- 2026-10-21
- Next earnings is estimate
- No
- Company name
- Rollins
- Sector
- Pest control services
- About
- Rollins is one of the largest pest control companies in the world, based in Atlanta. It owns Orkin and many other brands, such as HomeTeam Pest Defense, Clark Pest Control, Western Pest Services, Fox Pest Control, Saela and Romex. Its companies and franchises protect more than 2.8 million homes and businesses against pests, termites and rodents in North and South America, Europe, Asia, Africa and Australia. Most revenue is recurring: customers pay for regular service under contracts, and Rollins adds termite and other one-time services. It makes money from these service fees, with low capital needs, and it uses the cash to buy smaller pest control companies and to pay dividends. The Rollins family controls about a third of the shares through LOR, Inc. and related entities. Jerry Gahlhoff is the CEO.
- Thesis
- The market fears that AI search breaks the way Rollins finds new residential customers. Many of its brands get leads from people who search online or call in. Management said that leads fell by double digits from late May 2026 through the end of Q2, and it thinks 50% to 60% of the change comes from the move to AI answers in search, such as Google's AI Overviews. Q2 2026 missed expectations: organic growth slowed to 5.7%, and the operating margin fell to 18.7% from 19.8% because costs were set for faster growth. The stock fell 9.5% after the report, and Piper Sandler cut its rating to Neutral on September 24, 2026. A new CFO since June 2026 adds some doubt. For the gap to close, Rollins must show that its growth model still works when search changes. The checks are clear. Organic growth must stay near the 2026 framework of about 6%, with incremental margins near 10%. Residential lead volume must stop falling, and relationship channels such as home builders and door-to-door sales must keep growing. Margins must recover after the staff cuts of May and June 2026. Free cash flow must stay strong enough to pay for buybacks, such as the $100 million in Q3 2026, and for acquisitions. The first evidence comes with the Q3 2026 report on October 21, 2026, and the full-year report in February 2027. If leads stabilize, the gap can close over the next three to five quarters. If AI search keeps cutting leads, Rollins will need new ways to find customers, and the gap can last into 2028.
- Risks
- AI answers in search can send fewer people to Rollins' websites and phone lines. Management said that residential leads fell by double digits from late May 2026 through the end of Q2, and that many of its fixes in June and July 2026 did not give results yet. If this continues, residential organic growth stays below the 7% to 8% medium-term target.
Rollins set its costs for 7% to 8% growth, so slower growth cuts margins. The operating margin fell to 18.7% in Q2 2026 from 19.8%. Medical costs, wages and fuel also rise.
Growth depends partly on acquisitions of smaller pest control companies. Higher prices for these companies, or poor integration, would lower returns.
The Rollins family controls about a third of the shares, so other shareholders have little say. The CFO changed in June 2026.
- Balance sheet
- Cash: $109M
Debt: $716M
Net debt: $607M
Net debt / EBITDA: 1.0× (low)
Interest cover: 19×
Undrawn credit line: $1.0B, to February 2028
Debt due within 12 months: $216M
Last debt due: 2035
Rollins funds itself with $500 million of senior notes due February 2035 and with commercial paper. Debt is the notes at face value plus $216 million of commercial paper at June 30, 2026; the commercial paper had an average term of 4.4 days and is the part due within 12 months. Debt does not include $412 million of operating lease liabilities. Commercial paper rose from $114 million at December 31, 2025, mostly to pay for Romex and eight other acquisitions in the first half. Interest cover is operating income divided by net interest expense for the first half of 2026. The $1.0 billion revolving credit facility, which ends in February 2028, was not drawn and also backs the commercial paper. Its covenant limits net debt to 3.5 times EBITDA. In September 2026, management said that leverage is about 1 times EBITDA. In Q3 2026, Rollins bought back $100 million of stock. It pays a dividend of $0.1825 per share each quarter, about $88 million a quarter.
As of 2026-06-30.
- Checkpoints
- Oct 21, 2026: Q3 2026 results: organic growth, leads and margin. Pending. Watch: Organic growth near 6%, residential leads that stop falling, and a margin near the Q3 2025 level pass; organic growth well below 6% or a lower 2026 framework fails.
Feb 2027 (estimate): Full-year 2026 results and 2027 framework. Pending. Watch: About 6% organic growth for 2026, incremental margins near 10%, and a 2027 framework back toward 7% to 8% organic growth pass; a lower 2027 framework fails.
- Recent events
- 2026-10-07: Rollins said that it will report Q3 2026 results after the market closes on October 21, 2026, with a call on October 22.
2026-09-24: Piper Sandler cut its rating on Rollins to Neutral, with a $33 price target. The stock fell 6.8% that day.
2026-09-23: At the J.P. Morgan U.S. All Stars Conference, the CEO and the CFO said that residential leads fell by double digits from late May 2026 through the end of Q2. They think 50% to 60% of the change comes from the move to AI answers in search. They kept the 2026 framework of about 6% organic growth and about 10% incremental margins, with more of the result in Q4. Rollins bought back $100 million of its stock in Q3 2026.
2026-07-22: Rollins reported Q2 2026 revenue of $1.08 billion, up 7.9%, with organic growth of 5.7%. The operating margin fell to 18.7% from 19.8%, and adjusted EPS was $0.32. Management said that brands that depend on search, digital media and inbound calls had fewer leads, and that it made changes to align costs with demand. The stock fell 9.5% after the report.
2026-07-21: Rollins declared a quarterly dividend of $0.1825 per share, payable on September 10, 2026.
2026-05-27: Rollins said that CFO Kenneth Krause will leave on June 15, 2026 for a company in another industry. Will Harkins, the Chief Accounting Officer since March 2025, became CFO.
2026-05-14: At its investor conference, Rollins kept its medium-term targets: 7% to 8% organic growth, 2% to 3% growth from acquisitions, 30% to 35% incremental margins in the core business, and free cash flow conversion above 100%.
2026-04-22: Rollins reported Q1 2026 revenue of $906 million, up 10.2%, with organic growth of 6.6%. On April 1, 2026, it bought Romex Pest Control for $95.7 million.