ROL changes
Pick any two versions below to diff them.
- Price
- $33.78 → $35.31(+4.5%)
- Next earnings
- Oct 21, 2026 → Jan 21, 2027
- Next earnings is estimate
- No → Yes
- Thesis
- The market fears that AI search breaks the way Rollins finds new residential customers. Many of its brands get leads from people who search online or call in. Management said that leads fell by double digits from late May 2026 through the end of Q2, and it thinks 50% to 60% of the change comes from the move to AI answers in search, such as Google's AI Overviews. added: Growth then slowed further. Organic growth was 5.7% in Q2 2026 removed: missed expectations: organic growth slowed to 5.7%, and added: 4.4% in Q3 2026, and the added: Q3 operating margin fell to removed: 18.7% added: 20.5% from removed: 19.8% because costs were set for faster growth. The stock fell 9.5% after the report, and added: 21.9%. In October 2026, management said that residential customer acquisition was still under pressure. Piper Sandler cut its rating to Neutral on September 24, removed: 2026. A added: 2026, and a new CFO since June 2026 adds some doubt. For the gap to close, Rollins must show that its growth model still works when search changes. The checks are clear. Organic growth must removed: stay near the 2026 framework of added: return to about removed: 6%, with incremental margins near 10%. added: 6% or more. Residential lead volume must stop falling, and relationship channels such as home builders and door-to-door sales must keep growing. Margins must recover after the staff cuts of May and June 2026. Free cash flow must stay strong enough to pay for buybacks, such as the removed: $100 added: $120 million in Q3 2026, and for acquisitions. The removed: first added: next evidence comes with the removed: Q3 2026 added: full-year report removed: on October 21, 2026, and the removed: full-year report added: 2027 framework in removed: February added: early 2027. If leads stabilize, the gap can close over the next three to five quarters. If AI search keeps cutting leads, Rollins will need new ways to find customers, and the gap can last into 2028.
- Risks
- AI answers in search can send fewer people to Rollins' websites and phone lines. Management said that residential leads fell by double digits from late May 2026 through the end of Q2, and that many of its fixes in June and July 2026 did not give results yet. added: Organic growth slowed to 4.4% in Q3 2026. If this continues, residential organic growth stays below the 7% to 8% medium-term target. Rollins set its costs for 7% to 8% growth, so slower growth cuts margins. The operating margin fell to 18.7% in Q2 2026 from removed: 19.8%. added: 19.8%, and to 20.5% in Q3 2026 from 21.9%. Insurance and claims costs about doubled in Q3 2026. Medical costs, wages and fuel also rise. Growth depends partly on acquisitions of smaller pest control companies. Higher prices for these companies, or poor integration, would lower returns. The Rollins family controls about a third of the shares, so other shareholders have little say. The CFO changed in June 2026.
- Balance sheet
- Cash: removed: $109M added: $129M Debt: removed: $716M added: $740M Net debt: removed: $607M Net debt / EBITDA: 1.0× (low) added: $611M Interest cover: removed: 19× added: 20× Undrawn credit line: $1.0B, to February 2028 Debt due within 12 months: removed: $216M added: $240M Last debt due: 2035 Rollins funds itself with $500 million of senior notes due February 2035 and with added: short-term debt. Short-term debt was $240 million at September 30, 2026; at June 30, 2026, it was commercial removed: paper. added: paper with a term of a few days. Debt is the notes at face value plus removed: $216 million of commercial paper at June 30, 2026; the removed: commercial paper had an average term of 4.4 days added: short-term debt, and added: the short-term debt is the part due within 12 months. Debt does not include removed: $412 added: $399 million of operating lease liabilities. removed: Commercial paper added: Short-term debt rose from removed: $114 added: $124 million at December 31, removed: 2025, mostly to pay for Romex and eight other acquisitions in added: 2025. In the first removed: half. added: nine months of 2026, Rollins spent $163 million on acquisitions and $163 million on buybacks. Interest cover is operating income divided by net interest expense for the first removed: half added: nine months of 2026. The $1.0 billion revolving credit removed: facility, which added: facility ends in February removed: 2028, was not drawn added: 2028 and also backs the commercial removed: paper. added: paper; it was not drawn at June 30, 2026. Its covenant limits net debt to 3.5 times EBITDA. In September 2026, management said that leverage is about 1 times EBITDA. In Q3 2026, Rollins bought back removed: $100 added: $120 million of stock. It pays a dividend of $0.1825 per share each quarter, about removed: $88 added: $87 million a quarter. added: The figures come from the Q3 2026 release, because Rollins had not filed its Q3 10-Q by October 22, 2026. As of removed: Jun added: Sep 30, 2026.
- Checkpoints
- Oct 21, 2026: Q3 2026 results: organic growth, leads and margin. removed: Pending. added: Failed. Watch: Organic growth near 6%, residential leads that stop falling, and a margin near the Q3 2025 level pass; organic growth well below 6% or a lower 2026 framework fails. removed: Feb added: Outcome: Organic growth slowed to 4.4%, well below 6%, and the operating margin fell to 20.5% from 21.9%. Jan 21, 2027 (estimate): Full-year 2026 results and 2027 framework. Pending. Watch: About 6% organic growth for 2026, incremental margins near 10%, and a 2027 framework back toward 7% to 8% organic growth pass; a lower 2027 framework fails.
- Recent events
- Oct added: 21, 2026: Rollins reported Q3 2026 results. Revenue grew 6.2% to $1.09 billion, but organic growth slowed to 4.4%. The operating margin fell to 20.5% from 21.9%, and adjusted EPS fell to $0.34 from $0.35. Free cash flow grew 28.8% to $235 million, helped by a $63 million tax refund. Rollins bought back $120 million of stock and paid $87 million of dividends in the quarter. The CEO said that the company is disappointed with the quarter and that residential customer acquisition was still under pressure. Rollins said it moves marketing money from its old digital methods to the channels that give the best return, which include visibility in AI search. The release gave no new outlook. Oct 7, 2026: Rollins said that it will report Q3 2026 results after the market closes on October 21, 2026, with a call on October 22. Sep 24, 2026: Piper Sandler cut its rating on Rollins to Neutral, with a $33 price target. The stock fell 6.8% that day. Sep 23, 2026: At the J.P. Morgan U.S. All Stars Conference, the CEO and the CFO said that residential leads fell by double digits from late May 2026 through the end of Q2. They think 50% to 60% of the change comes from the move to AI answers in search. They kept the 2026 framework of about 6% organic growth and about 10% incremental margins, with more of the result in Q4. Rollins bought back $100 million of its stock in Q3 2026. Jul 22, 2026: Rollins reported Q2 2026 revenue of $1.08 billion, up 7.9%, with organic growth of 5.7%. The operating margin fell to 18.7% from 19.8%, and adjusted EPS was $0.32. Management said that brands that depend on search, digital media and inbound calls had fewer leads, and that it made changes to align costs with demand. The stock fell 9.5% after the report. Jul 21, 2026: Rollins declared a quarterly dividend of $0.1825 per share, payable on September 10, 2026. May 27, 2026: Rollins said that CFO Kenneth Krause will leave on June 15, 2026 for a company in another industry. Will Harkins, the Chief Accounting Officer since March 2025, became CFO. May 14, 2026: At its investor conference, Rollins kept its medium-term targets: 7% to 8% organic growth, 2% to 3% growth from acquisitions, 30% to 35% incremental margins in the core business, and free cash flow conversion above 100%. Apr 22, 2026: Rollins reported Q1 2026 revenue of $906 million, up 10.2%, with organic growth of 6.6%. On April 1, 2026, it bought Romex Pest Control for $95.7 million.