Key Points
Although Rentokil is bigger, Rollins has outperformed over the last three years.
The market is concerned about Rentokil's massive 2023 Terminix acquisition.
Rentokil's valuation and yield are superior to Rollins', but it also has bigger problems.
If you've got unwanted houseguests like ants, roaches, or termites, you have a ton of options for how to deal with them, from do-it-yourself spray cans to local exterminators with names like "What's Bugging You" or "Buzz Kill."
But if you want to invest in a U.S. pest exterminator company, you've basically got two pure-play exterminator options: Rollins (NYSE: ROL) or Rentokil (NYSE: RTO). Which one of these two bug-busting behemoths is the better buy right now?
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Bug business is big business
Don't be surprised if you've never heard of "Rollins" or "Rentokil." Rollins is the parent company of exterminator brands Orkin and Critter Control, making it the largest pest control company in North America, raking in $3.4 billion in revenue in 2024.
Rentokil, however, has long been the largest pest control company in the world, and it got even bigger after it purchased U.S. exterminator Terminix in 2023. In 2024, it brought in $6.8 billion in revenue -- about double that of Rollins.
These two rivals still have plenty of room for further growth. The North American pest control market is fragmented, with more than 33,000 businesses competing for an estimated $25 billion market. Many of these smaller businesses could be targets for the acquisitive Rollins and Rentokil.
Rentokil stumbled as Rollins surged
Although Rentokil has a long history of growing through acquisition, the Terminix purchase -- the company's largest ever, by far -- has proven to be a challenge. Among other issues, Terminix's branches didn't have streamlined data and IT systems, and integration has been proceeding far more slowly than anticipated, which resulted in the company cutting its growth projections and losing market share.
Rentokil CEO Andy Ransom now says he expects to achieve $100 million in cost reductions and a 20% operating margins in North America by 2026, but admits that "not all branches" may be fully integrated by then. Considering about 60% of the company's revenue comes from North America, these continuing problems have dragged down the company's overall profitability and revenue growth.
Meanwhile, Rollins' revenue and net income have grown by more than 30% over the past three years, and the company has successfully integrated a number of smaller acquisitions during that time. The market has taken note: Rollins' share price has risen by 49.7% over the last three years, while Rentokil's has dropped by 27.7%. That's given Rentokil's stock an attractive valuation: it's trading at just 17.1 times forward earnings, compared to 51.6 times forward earnings for Rollins. That same sinking share price has boosted Rentokil's dividend yield to about 2.5%, currently much higher than Rollins' 1.1%.
Which is the better bug... uh... buy?
Rollins is a solid company and a solid investment. Meanwhile, Rentokil's poor performance is due to one thing: the Terminix acquisition. If Rentokil can (finally) integrate Terminix successfully, it should benefit from the same economies of scale in a fragmented U.S. pest control market as Rollins, with both companies poised for long-term success.
Luckily, there are signs Rentokil's North American business is indeed turning around: in Q2 2025, its North American organic growth rate doubled quarter-over-quarter to 1.4%, with its customer retention continuing to improve. If you believe, as I do, that Rentokil will eventually turn its U.S. operations around successfully, there's plenty of upside to buying shares of Rentokil now while they're still attractively valued. Plus you'll get a nice dividend to reward you for your patience. Although it's a bit riskier, Rentokil looks like the better buy.
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John Bromels has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rollins. The Motley Fool recommends Rentokil Initial Plc. The Motley Fool has a disclosure policy.
