Investment Thesis
Rollins demonstrates solid 11% revenue growth and exceptional free cash flow generation ($111.2M, 12.3% FCF margin), indicating operational strength. However, flat net income despite revenue expansion signals concerning margin compression, exacerbated by weak liquidity ratios (0.65x current ratio) that constrain financial flexibility.
Strengths
- Strong organic revenue growth at 11% YoY demonstrating market share gains
- Exceptional free cash flow generation of $111.2M with 12.3% FCF margin
- Asset-light business model requiring minimal capex ($7.1M) with strong FCF conversion
- Solid 16.1% operating margins reflecting operational efficiency
- Moderate leverage at 0.35x Debt/Equity with manageable long-term debt
Risks
- Net income stagnation (0% YoY) despite 11% revenue growth indicates margin compression
- Dangerously low liquidity ratios (current: 0.65x, quick: 0.59x) limiting operational flexibility
- Low returns on equity (7.8%) and assets (3.4%) suggesting capital deployment inefficiency
- Margin compression suggests cost of revenue or operating expenses growing faster than revenue
Key Metrics to Watch
- Gross and operating margin trends to determine if compression is stabilizing or accelerating
- Current ratio and working capital management indicating improving or deteriorating liquidity position
- Net income recovery trajectory and path to profitability growth alignment with revenue expansion
Financial Metrics
Revenue
906.4M
Net Income
107.8M
EPS (Diluted)
$0.22
Free Cash Flow
111.2M
Total Assets
3.2B
Cash
116.5M
Profitability Ratios
Gross Margin
27.8%
Operating Margin
16.1%
Net Margin
11.9%
ROE
7.8%
ROA
3.4%
FCF Margin
12.3%
Balance Sheet & Liquidity
Current Ratio
0.65x
Quick Ratio
0.59x
Debt/Equity
0.35x
Debt/Assets
56.3%
Interest Coverage
N/A
Long-term Debt
486.6M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-04-29T14:19:20.814599 |
Data as of: 2026-03-31 |
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