LON:RTO | Rentokil Initial PLC - Buy Signal

12th Jun '15 by Pcarrallo10

5 comments 4644 reads

Rentokil Initial PLC and its subsidiaries provide all kinds of working uniforms, protective equipment, linen services to hotels, restaurants and hospitals along with many other services. They operate in Europe, North America, the Asian Pacific and Africa.

http://www.rentokil-initial.com/

It is true that there is an important goodwill in the balance sheet of the company during last two years, but the overall view is positive.

As Yahoo Financial says: ‘Old Mutual Global Investors' Simon Murphy has been buying more shares in Rentokil Initial, which is gradually refocusing its business’.

Recommendation trends for this month:

4 Strong Buy

2 Buy

3 Hold

3 Underperform

1 Sell

Historic peak in the last 12 months?	Yes
Spread <1%?	Yes, 0.13%
Exchange market size?	15,000 shares
What is my max spending according to EMS?	*15,000 £1.5260 = £22,890**
Is EBITDA Positive?	Yes, £413 m
Market Cap	£2770 m
Is Market Cap / Ebitda < 20?	Yes, £2770 / £413 = 6.71
Debt	£761.5 m
Is debt smaller than 3 times EBITDA?	Yes, 1.84 times EBITDA

Make sure to check out my trading strategy at http://www.stockopedia.com/content/trading-made-easy-my-strategy-for-buying-stocks-100683/

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Rusty2

15th Jun '15

I thought Rentokill had sold Initial to Interserve last year to focus more on pest control?

But I see its still on their website.

WarrantStar

Yes I thought that too. I have been researching buying Interserve and I was pretty sure that they bought Initial too.

TheWatchmaker

16th Jun '15

Our company phones/keyboards are cleaned by Initial and they turned up in Interserve branded outfits the other week. The guy said they'd been taken over last year.

I like the way Rentokil is going, selling off lower margin business and focussing more on pest control. It got rid of City Link a while ago.

Re: Interserve I have a long holding, think its pretty good company, the Initial buy seems a good fit, it has really gone up the StochRankings later, now 88, shares seem to have broken out, my main concern is the low margins.

For Interserve the lower margin business is construction. Their strategy has been to move into services because

1) Longer term revenue visibility
2) Higher margins
3) Less cyclical
4) Less competitive

It makes a lot of sense to me and I will probably become a holder soon.

Rentokil Initial PLC - Buy Signal

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Pcarrallo10

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