DCF Studio

    ROL · NYQ · Consumer Cyclical

    Rollins, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 23.93

    Market price

    USD 36.03

    Implied upside

    -33.6%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedReported capital expenditure averages just 0.94% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 3.32% of revenue so the forecast is not handed free growth. The accounts do not separate depreciation from amortisation, so the combined charge is used - if a large part of it is amortisation of an acquisition, the reported capex is probably right and this substitution is not. Override it if the reported figure is right.

    Current EV/EBITDA of 21.5x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 23.93-33.6%
    Exit multiple
    USD 35.96-0.2%
    Market price
    USD 36.03

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m425m851mFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 4.0bnUSD 4.3bnUSD 4.6bnUSD 4.9bnUSD 5.2bnUSD 5.5bnUSD 5.7bnUSD 5.9bnUSD 6.1bnUSD 6.2bn+4.9%
    EBITUSD 770.2mUSD 827.3mUSD 883.5mUSD 938.2mUSD 990.5mUSD 1.0bnUSD 1.1bnUSD 1.1bnUSD 1.2bnUSD 1.2bn+4.9%
    NOPATUSD 608.4mUSD 653.6mUSD 698.0mUSD 741.2mUSD 782.5mUSD 821.3mUSD 857.0mUSD 888.9mUSD 916.6mUSD 939.5m+4.9%
    Add depreciation & amortisationUSD 134.4mUSD 144.4mUSD 154.2mUSD 163.8mUSD 172.9mUSD 181.5mUSD 189.3mUSD 196.4mUSD 202.5mUSD 207.6m+4.9%
    Less capital expenditureUSD -134.4mUSD -150.6mUSD -167.5mUSD -184.9mUSD -202.7mUSD -220.5mUSD -238.3mUSD -255.6mUSD -272.3mUSD -288.0m+8.8%
    Capex, % of revenue3.3%3.5%3.6%3.8%3.9%4.0%4.2%4.3%4.5%4.6%-
    Less increase in working capitalUSD -15.1mUSD -16.0mUSD -15.7mUSD -15.3mUSD -14.6mUSD -13.7mUSD -12.6mUSD -11.3mUSD -9.8mUSD -8.1m-6.7%
    Free cashflow to firmUSD 593.3mUSD 631.4mUSD 669.0mUSD 704.8mUSD 738.1mUSD 768.5mUSD 795.4mUSD 818.4mUSD 837.0mUSD 851.0m+4.1%
    Discount factor0.96180.88980.82310.76150.70450.65170.60290.55770.51600.4773-
    Present valueUSD 570.6mUSD 561.8mUSD 550.7mUSD 536.7mUSD 520.0mUSD 500.8mUSD 479.6mUSD 456.5mUSD 431.9mUSD 406.2m-
    Present Value Of The ForecastUSD 5.0bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.812Reported 0.720, pulled toward 1.0 (Blume)
    Cost of equity8.33%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 25.4x interest cover. Book interest / average debt was lower, at 3.1%.
    Market capitalisationUSD 17.3bn94.4% of capital
    Total debtUSD 1.0bn5.6% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.10%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 23.93

    60% of EV

    Forecast FCFF, final year
    USD 851.0m
    Capex at depreciation, working capital in reinvestment
    USD 939.5m
    Less reinvestment at g/ROIC (8.6% of NOPAT)
    USD -80.5m
    Capitalised
    USD 859.1m
    ROIC (reported)
    29.2%
    Terminal value, undiscounted
    USD 15.7bn
    Terminal value, discounted
    USD 7.5bn
    Enterprise value
    USD 12.5bn
    Less net debt
    USD 938.0m
    Equity value
    USD 11.6bn

    Exit at 20.0x EBITDA

    Value per shareUSD 35.96

    73% of EV

    Terminal value, undiscounted
    USD 27.9bn
    Terminal value, discounted
    USD 13.3bn
    Enterprise value
    USD 18.3bn
    Less net debt
    USD 938.0m
    Equity value
    USD 17.4bn

    Spread between methods: 40%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.10%32.7635.1438.2142.3047.99
    7.10%26.4827.8429.5231.6234.33
    8.10%22.1222.9523.9325.1326.60
    9.10%18.9119.4320.0420.7721.63
    10.10%16.4516.7917.1817.6318.17

    Outlined: this model. Green text: above today's price of 36.03. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year11.7%5.2%9.9%
    EBIT margin19.4%19.0%27.9%
    Discount rate-8.1%6.3%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.