Rentokil

[bluedonkey]

I generally buy for income and then LTBH.

I bought Rentokil over 10 years ago. Recently it has had a good run such that the yield is now less than 1% and the P/E is 37. These are the sort of ratings that a great growth stock might have but I don't see Rentokil falling into this category. I am thinking of selling and switching into something with a better yield.

Any idea why Rentokil is currently so highly rated? Can't help feeling that I'm missing something.

[GeoffF100]

I have held Rentokil for longer than that. I have no idea what its future growth prospects are. I certainly do not know any more than the market. Do you?

[bluedonkey]

I have held Rentokil for longer than that. I have no idea what its future growth prospects are. I certainly do not know any more than the market. Do you?

Well, quite. I suppose I'm asking what does the market know?

[PinkDalek]

... and the P/E is 37

Not one I follow but do you have a source?

I've only found trailing N/As which would have been based on last year's Finals. Whereas I'm guessing the 37 relates to this year's Interims.

Presumably you saw the Third Quarter trading update:

https://www.londonstockexchange.com/exc ... 69155.html

Maybe the later acquisition is felt to be earnings enhancing:

https://www.londonstockexchange.com/exc ... 89930.html

[bluedonkey]

... and the P/E is 37

Not one I follow but do you have a source?

I've only found trailing N/As which would have been based on last year's Finals. Whereas I'm guessing the 37 relates to this year's Interims.

Presumably you saw the Third Quarter trading update:

https://www.londonstockexchange.com/exc ... 69155.html

Maybe the later acquisition is felt to be earnings enhancing:

https://www.londonstockexchange.com/exc ... 89930.html

Thanks. The dividend yield is the actual historic yield for my holding. The P/E figure is from Hargreaves.

From those news items, it looks like Rentokil is on the acquisition trail. Classic case of buying unquoted companies on I presume relatively low P/Es and so enhancing the earnings of a high P/E quoted company. The news stories indicate that this acquisition-led growth has some way to go. Still can't help feeling that the yield and P/E are overblown.

[PinkDalek]

The P/E figure is from Hargreaves.

Thanks, I might take a further look later but I may well have missed any boat.

https://www.hl.co.uk/shares/shares-search-results/r/rentokil-initial-plc-ordinary-1p shows they are using an adjusted EPS of 13.07p from the 2018 results. As calculated below (before the Pension Settlement):

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/RTO/13984437.html

[bluedonkey]

Apparently the Chronic Investor has just recommended Rentokil. Which presumably means it's a good time to sell.