The global experts in pest control, as they say (LON: RTO) have shown decent but slow growth over the years. This company has a market cap of a little over £15B and an underlooked dividend-paying stock that can be a good friend of stocks in your portfolio.
A financial snapshot to determine the company’s focus
The company has proven a constant sales growth rate of 11.16% CAGR and has a gross profit of £977 million in 2022. With a decent 23% gross margin, the business enterprise’s after-tax earnings are around 6% of the sales. With an average dividend payout ratio of 54%, the RTO stock is paying a consistent dividend per share of £0.06 on average.
The corporation’s fixed assets have grown from £416 million in 2016 to £625 million in 2022. The business enterprise has drastically expanded its cash and brief-term investments. Its debt-to-equity ratio is 0.45, indicating enough reserves and cash to manage its debt. Along with that, Rentokil continues stability between its cash flow from operations and EBITDA with the help of maintaining changes in operating capital to a minimum.
Along with regular dividends and substantial cash flows throughout the years, the management of Rentokil is likely focused on maintaining slow but sustainable growth. Additionally, its focus is on making regular net profits to distribute to its shareholders.
Technical analysis and prediction of RTO stock price
The RTO stock price is trading in a consolidation zone with a level of £612 at the press time. However, looking from a broader horizon, the trend is towards the floor. The current resistance for the RTO stock price is £621. It can be broken only if a trend reversal occurs.
However, if the stock continues to flow with the trend, it will soon break its immediate support level of £585. As per the current technical analysis, the price prediction will go towards the downtrend as the bears constantly reject bullish candles above the trendline. If the RTO stock price breaks past its immediate support, it will move toward the 2nd support of £548.
Conclusion
Rentokil Initial plc is a profitable company that efficiently manages its finances, reinvesting funds for growth. The company’s sales growth exceeds industry averages, the management is focused on being cash-positive and dividend distributor rather than sales growth. The technical analysis suggests a downtrend that is likely to continue if the bears keep rejecting the bulls. However, a trend reversal can come if the bulls are able to push the RTO stock price above the immediate resistance level
Technical Levels
Support: £585, and £548
Resistance: £621, and £654
Disclaimer
The views and opinions stated by the author, or any people named in this article, are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing
Source: https://www.thecoinrepublic.com/2023/10/03/rto-stock-price-dividend-underdog-that-can-boost-portfolios/