RTO changes
Pick any two versions below to diff them.
- Price
- $23.32 → $23.59(+1.2%)
- Thesis
- The market prices Rentokil as a company that has not made the Terminix purchase work. In H1 2026, organic revenue growth was 3.6%, and North America Pest Control Services grew only 2.6%. In Q3 2026, this business grew only 2.4%. On July 30, 2026, the new CEO, Mike Duffy, retired the target of a 20% North America margin in 2027, because he will put savings back into growth. Residential lead flow weakened in July and August 2026, and it recovered only to a decline of about 1% in September. Investors also fear more competition from private equity owned pest control removed: companies, and Morgan Stanley downgraded the stock for this reason on September 29, 2026. added: companies. For the gap to close, four things must be true. North America Pest Control Services organic growth must rise above the 2.6% of H1 2026. Residential leads must grow again, and the new split of the US residential and commercial businesses must stop the fall in commercial growth. Free cash flow conversion must stay above 80%, as guided for 2026. Net debt must stay within 2 to 2.5 times adjusted EBITDA while Rentokil sells non-core businesses such as SOLitude. The Q3 trading update on October 22, 2026 kept the full-year profit outlook, but North America growth did not improve yet. The CEO will give detailed plans with the full-year results on February 25, 2027. The Q1 2027 trading update on April 22, 2027 shows the first effect of the split of the US residential and commercial businesses. The CEO said that the restructuring can take two years, so the gap can close slowly, over 2027 and 2028.
- Recent events
- Oct 22, 2026: Rentokil reported its Q3 2026 trading update. Revenue was $1,890 million, up 4.0%, and organic growth was 3.4%. North America Pest Control Services organic growth was 2.4%, and International Pest Control organic growth was 5.7%. Residential lead flow recovered to a decline of about 1% in September, after a weak July and August. Rentokil expects FY 2026 profit in line with market expectations. The Board approved a $200 million share buyback, which started on October 27, 2026 and ends no later than February 24, 2027. Rentokil now expects acquisition spending of about $100 million in 2026. Oct 22, 2026: Rentokil said that its Chief Financial Officer, Paul Edgecliffe-Johnson, will retire and leave the Board on January 31, 2027, for family health reasons. He will stay as a senior adviser. The Board started a search for a successor. If no successor starts by then, Sarah Sergeant, the Group Financial Controller, will be interim Chief Financial Officer from February 1, 2027. Sep 29, 2026: Morgan Stanley removed: downgraded Rentokil to equal-weight from overweight and cut its price target to 420 pence from 500 pence. It said that private equity owned companies now have more than 16% of the revenue of the top 100 US pest control companies, up from 1% ten years ago. removed: It also expected a weak Q3 trading update. Sep 22, 2026: Rentokil agreed to sell SOLitude Lake Management, its US lake and pond management business, to Bain Capital for $230 million on a cash-free, debt-free basis. It expects net cash of about $180 million after tax. The sale is part of the plan to simplify the group. Aug 13, 2026: Rentokil formalised two operating divisions, North America and International. It appointed Phill Wood as CEO of the International Division and Matt Jochim, a former McKinsey partner, as Group Chief Transformation Officer from September 7, 2026. Aug 3, 2026: Rafael Carrasco joined as CEO of North America. He was President of WM Healthcare Solutions at WM. Rentokil had announced the appointment on May 21, 2026. Jul 30, 2026: Rentokil reported H1 2026 results. Revenue was $3,589 million, with organic growth of 3.6%. Adjusted operating profit rose 6.6% at constant currency to $556 million. Free cash flow was $318 million, and net debt fell to 2.4 times adjusted EBITDA. The CEO retired the 2027 North America margin target of 20% and said that residential lead flow weakened at the end of Q2 and into July. Rentokil kept its full-year profit outlook and raised the interim dividend by 8.0% to 4.48 cents. Apr 23, 2026: A Rentokil finance subsidiary issued $500 million of 4.625% senior notes due 2031. Rentokil will use the money for general purposes, including debt repayment. Apr 16, 2026: Rentokil reported its Q1 2026 trading update. Revenue was $1,677 million, up 4.3%, and organic growth was 3.4%. North America organic growth was 3.9%, and Pest Control Services organic growth was 2.8%.