Rentokil Initial plc (RTO)

Price£3.48Cached quoteAs of 2026-09-04 23:53 UTC

AI: Fair-priced

Price checkThe shares look fairly priced because the discount still depends on a North America recovery.

Each New York depositary share represents five ordinary shares. Using the supplied 2024 diluted earnings of 12.14 pence per ordinary share, the current valuation is roughly 29 times reported earnings. Operating cash of £678 million minus £171 million of capital spending leaves £507 million, implying roughly 17 times that simple cash measure. Newer data are similar: annualising first-half 2026 adjusted earnings, which remove some acquisition accounting charges and one-off costs, implies about 18 times earnings; annualised free cash flow implies about 19 times. Those are reasonable, not deep-value, levels. (rentokil-initial.com)

Big pictureCash has stayed reliable even when profits slipped, which gives the business a solid base.

From 2020 through 2024, operating cash flow stayed positive at £548 million, £563 million, £600 million, £737 million and £678 million. After capital spending, a simple cash surplus remained between £418 million and £570 million every year. Reported earnings were less steady: 2024 operating profit fell to £549 million from £625 million, and net income fell to £307 million from £381 million. First-half 2026 free cash flow, meaning cash left after running and investing in the business, rose 12.8% to $318 million, but weaker North American residential leads show recurring demand is not immune to slowdowns. (sec.gov)

Business strengthRecurring pest services keep cash resilient, but acquisition debt still reduces the margin of safety.

The 2024 balance sheet was acquisition-heavy: net debt was £2.77 billion and goodwill, the acquisition premium recorded on the balance sheet, was £5.16 billion versus £4.23 billion of equity; current liabilities also exceeded current assets. By June 2026, net debt had fallen to $3.58 billion and to 2.4 times a management measure of operating cash earnings, inside its target range. Capital allocation is restrained: 2024 dividends used about 45% of operating cash less capital spending, 2026 acquisition spending is expected near $120 million, and weighted shares rose only about 0.2% year over year. (sec.gov)

What could change the storyFaster North America growth would unlock upside; another slowdown would make today’s valuation look demanding.

The bull case is measurable. First-half 2026 North America cost work produced $45 million of gross savings, the annualised saving rate reached about $90 million, and pest-control service margins reached 19.7%. The bear case is equally concrete: management retired its 20% North America profitability target for 2027, residential lead flow weakened into July, and the termite-claim provision reached $392 million with $115–125 million of expected 2026 cash payments. The thesis strengthens if North America pest-service growth moves above roughly 3% without new claim charges; another slowdown or provision increase would weaken it. (sec.gov)

AI: News

North America target resetJuly results showed better cash flow, but weaker demand and a dropped profitability target shocked investors.

On July 30, first-half revenue reached $3.59 billion and free cash flow rose 12.8% to $318 million, while full-year profit guidance stayed unchanged. The problem was expectations: North American residential lead flow weakened late in the second quarter and into July, and management retired its 2027 target for a 20% operating profit margin, meaning operating profit as a share of revenue. The New York depositary shares fell about 17.6% that day. The timing strongly supports an expectations reset, though it cannot prove every part of the decline came from this news. (sec.gov)

2025 recovery rallyMarch results showed North America improving and cash strengthening, reversing some fear around the Terminix integration.

On March 5, 2025 results showed free cash flow of $615 million, up 24.5%, while North America pest-control service organic growth, meaning growth excluding acquisitions and currency effects, improved to 2.6% in the fourth quarter. Management also still expected more than a 20% North America operating margin in 2027. London shares jumped roughly 12–13% after the release. Investors were rewarding evidence that the turnaround was working; the later July target withdrawal therefore removed an important part of that earlier confidence. (sec.gov)

Loading local price history

Revenue

2023

2024

2025

Net income

2023

2024

2025

Free cash flow

2023

2024

2025

Total cash / debt

CashTotal debt

2022

2023

2024

2025

Financial statements

	2025	2024	2023	2022	2021	2020
Revenue	$6.91B	$6.62B	$6.38B	—	—	—
Operating expenses	$6.25B	$5.90B	$5.61B	$3.23B	—	—
Operating income	$584.0M	$644.0M	$727.0M	$412.7M	—	—
Operating margin	8.45%	9.73%	11.39%	—	—	—
EBITDA	$1.20B	$1.35B	$1.39B	—	—	—
EBITDA margin	17.41%	20.45%	21.75%	—	—	—
Net income	$470.0M	$392.0M	$474.0M	—	—	—
Net profit margin	6.80%	5.92%	7.42%	—	—	—
Basic EPSper basic share	$0.19	$0.16	$0.19	—	—	—
Diluted EPSper diluted share	$0.19	$0.16	$0.19	—	—	—

Review official source filings ↗

Owners

Reported major voting-rights holders

FCA threshold notices

10.44%of voting rights

BlackRock, Inc.Notified Apr 17, 2026

View holders

Reported major voting-rights holders of RTO
Holder	Voting rights
BlackRock, Inc.	10.44%Apr 17, 2026 · 263.88M votes
Independent Franchise Partners, LLP	4.98%Jan 15, 2026 · 125.8M votes
Swedbank Robur Fonder AB	2.97%Feb 19, 2026 · 75.06M votes
Janus Henderson Group Ltd	1.73%Jul 30, 2026 · 43.68M votes

These are threshold-crossing notices, not a complete ownership register. Percentages show issuer voting rights held through the listed share class, exclude financial instruments, and come from different dates. Positions may overlap.

Gray completes the 100% scale; it is not an estimate of other owners.

Source: FCA National Storage Mechanism ↗Updated Sep 27, 2026