Rentokil Initial plc
Rentokil Initial plc Fundamental Analysis
Rentokil Initial plc (RTO) shows weak financial fundamentals with a PE ratio of 45.12, profit margin of 4.91%, and ROE of 6.30%. The company generates $5.3B in annual revenue with weak year-over-year growth of 1.13%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 26.9/100 based on profitability, valuation, growth, and balance sheet metrics. The F grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze RTO's fundamental strength across five key dimensions:
Efficiency Score
WeakRTO struggles to generate sufficient returns from assets.
Valuation Score
ModerateRTO shows balanced valuation metrics.
Growth Score
WeakRTO faces weak or negative growth trends.
Financial Health Score
ModerateRTO shows balanced financial health with some risks.
Profitability Score
WeakRTO struggles to sustain strong margins.
Key Financial Metrics
Is RTO Expensive or Cheap?
P/E Ratio
RTO trades at 45.12 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, RTO's PEG of -7.30 indicates potential undervaluation.
Price to Book
The market values Rentokil Initial plc at 2.56 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 6.89 times EBITDA. This is generally considered low.
How Well Does RTO Make Money?
Net Profit Margin
For every $100 in sales, Rentokil Initial plc keeps $4.91 as profit after all expenses.
Operating Margin
Core operations generate 8.73 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $6.30 in profit for every $100 of shareholder equity.
ROA
Rentokil Initial plc generates $2.10 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Rentokil Initial plc produces operating cash flow of $731.54M, showing steady but balanced cash generation.
Free Cash Flow
Rentokil Initial plc generates strong free cash flow of $561.72M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $1.11 in free cash annually.
FCF Yield
RTO converts 5.48% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
45.12
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
-7.30
vs 25 benchmark
P/B Ratio
Price to book value ratio
2.56
vs 25 benchmark
P/S Ratio
Price to sales ratio
1.93
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
1.15
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.12
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.06
vs 25 benchmark
ROA
Return on assets percentage
0.02
vs 25 benchmark
ROCE
Return on capital employed
0.05
vs 25 benchmark
How RTO Stacks Against Its Sector Peers
| Metric | RTO Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 45.12 | 26.49 | Worse (Expensive) |
| ROE | 6.30% | 1307.00% | Weak |
| Net Margin | 4.91% | -5131.00% (disorted) | Weak |
| Debt/Equity | 1.15 | 0.81 | Weak (High Leverage) |
| Current Ratio | 1.12 | 10.48 | Neutral |
| ROA | 2.10% | -1549793.00% (disorted) | Weak |
RTO outperforms its industry in 0 out of 6 key metrics, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Rentokil Initial plc's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
48.98%
Industry Style: Cyclical, Value, Infrastructure
High GrowthEPS CAGR
-20.66%
Industry Style: Cyclical, Value, Infrastructure
DecliningFCF CAGR
7.43%
Industry Style: Cyclical, Value, Infrastructure
Growing