Rollins, Inc. ROL stock has had an impressive run year to date. Shares of the company have risen 18.1% compared with the 16.2% growth of the Building Products - Maintenance Service industry it belongs to and the 4.7% fall of the Zacks S&P 500 Composite.

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Rollins has an impressive Growth Score of B. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.

The company’s 2024 and 2025 earnings are expected to increase 10.1% and 11%, respectively, year over year.

Factors That Auger Well for ROL

The uptick in demand across all major service offerings is boosting ROL's prospects, driving strong 10.3% revenue growth for the year. With 7.9% organic growth complemented by strategic acquisitions, the company is effectively balancing internal expansion and external investments. This solid performance underscores Rollins' resilience and continued market leadership.

Moreover, ROL is set to gain significant strategic and financial benefits from its acquisition of Saela Holdings, a pest management company with more than $65 million in annual revenues. The deal expands Rollins' presence in key U.S. regions, strengthens market share and enhances customer acquisition through Saela’s diversified sales strategies. Maintaining Saela as a standalone brand ensures operational continuity while leveraging Rollins' resources. The acquisition supports Rollins' growth strategy while maintaining a strong balance sheet and financial discipline.

ROL's efforts to improve the work culture are encouraging. The company’s focus on talent development and safety has strengthened its operations. Improved hiring, training and onboarding have enhanced workforce readiness, while new safety initiatives, including enhanced driver training, reflect a long-term commitment to reducing incidents. Recognizing that building a strong safety culture takes time, Rollins remains dedicated to continuous improvement, ensuring both employee well-being and operational stability.

Rollins’ commitment to returning capital to its shareholders is commendable. In 2024, the company paid dividends worth $298 million. In 2023, 2022 and 2021, ROL paid dividends worth $264.3 million, $211.6 million and $208.7 million, respectively.

ROL: Risks to Watch

Rollins is grappling with surging operating expenses and weak liquidity. In 2024, the total operating expenses rose by 26.2% year over year, primarily driven by the company’s total sales, general and administrative expenses, which increased 10.9% year over year. In 2023, the total operating expenses surged 13.1% year over year.

Moreover, the declining trend in the current ratio (a measure of liquidity) is a major concern for ROL. In 2021, 2022 and 2023, the company’s current ratio was 1.03, 0.79 and 0.72, respectively. In 2024, the measure was 0.69. A current ratio of greater than 1 is considered desirable as it indicates that the company has sufficient assets to meet its short-term obligations.

ROL’s Zacks Rank

ROL currently carries Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks from the broader Zacks Business Services sector are Maximus MMS and AppLovin APP.

Maximus sports a Zacks Rank of #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

MMS has an encouraging earnings surprise history, having outpaced the Zacks Consensus estimate in three of the trailing four quarters and missed once. The average beat was 13.3%.

AppLovin also currently sports a Zacks Rank #1.

APP has an encouraging earnings surprise history, having outpaced the Zacks Consensus estimate in each of the trailing four quarters. The average beat was 23.5%.

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This article originally published on Zacks Investment Research (zacks.com).

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