If you’re serious about investing in companies with long-term resilience, above-market returns, and disciplined growth, Rollins, Inc. (NYSE: ROL) deserves your attention. As the industry leader in pest control, Rollins represents the kind of high-quality compounder that long-term investors seek out—and for good reason.
A Resilient Business in a Growing, Fragmented Market
Rollins operates in a $20 billion global pest control market that remains highly fragmented, with over 20,000 small competitors accounting for more than 40% of industry revenues. This fragmentation creates consistent opportunities for both organic growth and M&A—something Rollins has capitalized on with approximately 90 acquisitions over the past three years. The acquisition of Fox Pest Control in 2023, for instance, significantly extended its residential footprint and showcased Rollins’ reputation as an acquirer of choice.
More importantly, Rollins provides essential, recurring services that are not discretionary for either residential or commercial customers. In times of economic uncertainty, demand for pest control does not fall—people still need to eliminate termites, rodents, and insects. In fact, during the Great Financial Crisis, Rollins grew revenues by ~6% annually, and during COVID-19, revenue growth accelerated to ~12% per year. That kind of consistency across economic cycles is rare—and valuable.
Financial Strength and Disciplined Capital Allocation
From 2008 to 2023, Rollins grew its revenue at an ~8% CAGR, expanded adjusted EBITDA margins by over 800 basis points, and maintained over 75% of revenues as recurring. It’s a business that reliably compounds.
In recent years, Rollins has modernized its operations, improving routing efficiency, leveraging analytics for pricing, and simplifying its back-office systems. These moves have translated into tangible financial performance, with EBITDA margins expected to exceed 24% by 2026 and free cash flow conversion consistently over 100%.
Rollins also allocates capital with discipline: between 2018 and 2023, 47% of free cash flow was directed toward M&A, 39% to dividends (which have grown by 65% since 2022), and the remainder to repurchases. Management has made shareholder returns a clear priority without compromising reinvestment in the business.
Secular Tailwinds and a Strong Competitive Position
Rollins stands to benefit from several long-term growth drivers: climate change (which increases pest activity), urbanization, rising hygiene and compliance standards, and a generational shift toward outsourced services. These factors support the company’s ability to grow organically at 6–7% annually and tack on an additional 2–3% from acquisitions. That’s before considering pricing gains, which have historically run below inflation but are now trending higher due to better data and strategy.
With a dominant market share, strong brand equity through Orkin and its other brands, and a scalable platform, Rollins is exceptionally well-positioned to keep gaining share in a fragmented and growing market. Its strategic focus on expanding commercial services and international reach further supports its long-term case.
Yes, the stock trades at a premium valuation—around 45x FY25E EPS—but this reflects a consistent track record of performance, stability, and reinvestment discipline. In a market where true quality is increasingly scarce, Rollins earns its premium.
Conclusion
Rollins combines the characteristics that define a quality compounder: essential services, strong recurring revenues, an attractive market structure, excellent capital allocation, and long-term secular growth drivers. For investors focused on quality and resilience, Rollins is not just a good fit—it’s a foundational one.
Quality Thesis 
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