Rentokil Initial: Shares Appealing As Weak Pest Control Sales Offer an Attractive Entry Point

Investors were disappointed by decidedly weak third-quarter organic revenue growth of 2.3% for Rentokil Initial’s pest control category—the group’s largest category, accounting for 94% of total operating profit following the recent Terminix acquisition. Tepid demand for pest control services in North America—the pest control business’ most important geography, accounting for 75% of pest control sales—and a contraction in wholesale pest control product distribution sales drove the soft result. Elsewhere, Rentokil’s hygiene and wellbeing category delivered robust third-quarter organic sales growth of 5.7%, which tracks our full-year expectations.