Rentokil: Recent Sales and Marketing Investments Yet to Bear Fruit; Shares Still Attractive

Investors sent wide-moat Rentokil Initial shares significantly lower following its September 2024 trading update, which included a downwardly revised outlook for its North American pest control business. Ostensibly, Rentokil’s recent incremental investments in sales and marketing resources are yet to fully bear fruit, with lower-than-expected new customer lead flow holding back organic growth in the first two months of the second half of 2024. The commencement of Terminix branch integrations—into the broader Rentokil pest control branch network—caused disruption and contributed to the lower-than-anticipated organic growth outcome. Setting aside the North America pest control franchise, Rentokil’s global pest control and hygiene services businesses continue to perform well.