Rentokil share price: 3 things to watch out for in its Q1 results

Since October last year, the FTSE 100 company has seen its share price steadily rise and with its first quarter results coming around the corner, investors are hoping growth will continue.

Rentokil Initial will release its Q1 trading update on Thursday, with investors hoping that the pest controller can maintain the strong growth rates it recorded last year in 2019.

Strong organic growth

At the end of 2018, Rentokil ended the year on a high with ongoing revenue climbing 13.2% and ongoing operating profit up 13.3% compared with the previous year.

A decent portion of that growth was driven organically with the pest control company posting organic revenue growth of 3.7%, which is in line with its medium-term target of between 3% to 4%.

Rentokil’s M&A appetite

The primary driver of Rentokil’s growth and steady share price rise has been its strong acquisition pipeline in 2018, with the company buying 47 businesses in growth and emerging markets with combined annualised revenue of £170 million, for a cash spend of £298.4 million.

Over the course of 2018, Rentokil acquired 42 pest control businesses, four hygiene units and one small ambius asset, with acquisitions continuing to build density across its key markets and deepening its expertise in new and high-growth areas including vector control and fumigation.

‘We have delivered a very strong year of M&A, with a record 47 high-quality acquisitions building scale and density and also enabling us to broaden our expertise in newer growth areas, such as vector control and 2 fumigation,’ Rentokil CEO Andy Ransom said.

‘We have a very active pipeline of high-quality prospects in place, so I am confident of another good year in 2019.’

CMA investigates Rentokil-Mitie merger

Last week, the Competitions and Markets Authority (CMA) threatened to launch an investigation into Rentokil’s merger with pest controller Mitie on the basis that it could lead to ‘a substantial lessening of competition within a market or market in the UK.’

‘The CMA has found that it is unlikely that other companies will expand or enter the market in a timely manner and offset the loss of competition caused by the merger,’ the CMA said.

Rentokil acquired the unit in October last year in a deal valued at £40 million. However, the regulator has set a deadline of April 23 for the company to provide solutions to address its concerns or it commence an in-depth investigation into the merger which could see the deal delayed until the latter part of this year.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

European Central Bank meeting

Learn about how the ECB meeting affects interest rates and price stability ahead of the next announcement on 24 October 2019.

  • How might the next meeting affect the markets?
  • What are the key rate decisions to watch?
  • Why is the Governing Council announcement important for traders?

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Sell
Buy
Updated
Change

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
China 300
-
-
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.