Editor's Note: Our Industrials analyst Jay Van Sciver is hosting a special Black Book on our ROL short thesis today at 12:30PM ET. If you are an institutional investor interested in joining this call email firstname.lastname@example.org.
Rollins (ROL) shares have strengthened back to near all-time highs following some favorable competitor earnings reports. Our work continues to show signs that the tailwinds behind the pest control industry are fading.
Among other things, pricing trends in the industry suggest rates have been stretched and may now be facing competitive pressures based on our work. Customer counts have stalled, while revenue per customer has ramped significantly over the past five years following ROL’s pricing study.
Combined with other growth and competitive headwinds, we expect market recognition of pricing and ancillary service limitations to drive a revaluation in ROL shares. ROL remains a Best Ideas short, as we see the shares again offering >50% downside.
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