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Rollins (ROL) Up 5.3% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Rollins (ROL - Free Report) . Shares have added about 5.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Rollins due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Rollins Surpasses Q1 Earnings & Revenue Estimates

Rollins reported impressive first-quarter 2022 results, with both earnings and revenues beating the Zacks Consensus Estimate.

Adjusted earnings of 15 cents per share surpassed the Zacks Consensus Estimate and the year-ago figure by 7.1%. Revenues of $590.7 million beat the consensus mark by 2.8% and improved 10.3% year over year.

Other Quarterly Details

Organic revenues of $573.1 million increased 7% year over year. Organic revenues, on a constant exchange rate, were $569.5 million, up 6.3% year over year.

Residential revenues of $259.3 million increased 10.2% year over year on a reported basis and 5.8% organically. Commercial revenues of $205.8 million increased 9.1% year over year on a reported basis and 7.9% organically. Termite revenues of $119.7 million increased 13.3% year over year on a reported basis and 8.5% organically.

Adjusted EBITDA of $117.8 million increased 4.2% year over year. Adjusted EBITDA margin of 19.9% declined 116 basis points (bps) year over year.

Rollins exited the quarter with a cash and cash equivalents balance of $258.3 million compared with the prior quarter’s $105.3 million. Long-term debt at the end of the quarter was $280.8 million compared with $136.3 million at the end of the prior quarter.

The company generated $87.5 million of cash from operating activities in the reported quarter while capital expenditures were $8 million. Free cash flow was $79.5 million in the quarter.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

At this time, Rollins has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Rollins has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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