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Rollins (ROL) Up 73.9% Year to Date: What's Behind the Rally?

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Shares of Rollins, Inc. (ROL - Free Report) have gained 73.9% so far this year, outperforming the 57.2% growth of the industry it belongs to.

 

Let’s delve deeper into the factors that have contributed to the company’s price performance.

Consecutive Revenue Beat

Rollins came up with better-than-expected revenue performance in the last five quarters. A balanced approach to organic and inorganic growth continues to benefit the company’s top line.

Strategic Acquisitions Bode Well

Acquisitions are a major growth catalyst in Rollins’ business strategy. With the help of strategic acquisitions, the company continues to expand its global brand recognition and geographical footprint, and boost its revenues.

In July 2020, the company announced that one of its Australia-based subsidiaries completed the purchase of Adams Pest Control Pty Ltd., an independent pest control provider. Adams Pest Control will join the Orkin Australia portfolio of brands.

In June 2020, Rollins’ subsidiary, Rollins U.K. Holdings Ltd., completed the purchase of environment friendly companies, Albany Environmental Services Ltd. and Van Vynck Environmental Services, the company’s sixth and seventh acquisitions, respectively, in the U.K. Considering their market reputation, both Albany and Van Vynck are promising additions in terms of geographical expansion as well as business improvement.

Notably, Rollins completed 18 acquisitions during the first nine months of 2020. It made 30 acquisitions in 2019, 38 in 2018 and 23 in 2017.

Other Contributing Factors

Demand environment for this building maintenance servicer is in good shape, driven by higher government spending and decent construction activity. A balanced approach to organic and inorganic growth continues to benefit the company’s top line. Strong customer and employee retention keeps organic revenues in good shape.

Further, consistent dividend payment underscores the company's commitment to shareholders and underlines its confidence in business. The company paid out dividends of $153.8 million, $152.7 million and $122 million in 2019, 2018 and 2017, respectively. Such shareholder friendly moves not only instill investor confidence but also positively impact earnings per share.

Zacks Rank and Stocks to Consider

Rollins currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader Zacks Business Services sector are ICF International (ICFI - Free Report) , Automatic Data Processing (ADP - Free Report) and Insperity (NSP - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term expected earnings per share (three to five years) growth rate for ICF International, Automatic Data Processing and Insperity is 10%, 12% and 15%, respectively.

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