Rentokil’s recent underperformance presents a buying opportunity, with potential for increased organic growth and margins. Failure to integrate Terminix has hindered progress, leading to a narrow moat rating. Rentokil can improve by matching Rollins’ operational excellence or strengthening its brand. Fair value estimates for Rentokil and Rollins have been adjusted, with Rentokil deemed undervalued and Rollins overvalued. Margin expansion and improved returns could narrow valuation multiple differentials between the two companies by 2025. The industry remains fragmented, providing opportunities for both players to succeed.

Read more at Morningstar: We See Rentokil Leveraging Its Scale More Effectively