Shares Of Rentokil Initial Plc Reached A New 52-Week High Yesterday

On 02nd March 2020, The Rentokil Initial Plc’s (LON:RTO) stock closed at 52-week high, i.e. GBX 513.20 and is also continuously rising higher today. The first and primary reason for jump in share price would be outstanding performance in the year 2019 as compared to the year 2018 as per the published report on 27th February 2020.

As per the company report for the year to the end of December 2019, the company attained organic revenue growth of 4.5 per cent, which reported to be the highest growth rate in the last fifteen years. The ongoing revenue also improved due to excellent performance throughout the emerging market as well as in the growth market with an increase of 12.7 per cent and 10.5 per cent, respectively.

Rentokil Initial Plc also achieved 5.8 per cent growth for revenue or 4.3 per cent on an organic basis in its Hygiene business. It is due to robust execution in Europe, Pacific and the United Kingdom operations and continuously improved contribution of the Cannon transaction and the company’s interest in CWS-boco International GMBH before exiting the same.Â

In the financial results the company further reported that the year 2019 had been an excellent year for Merger and Acquisition activities. The company acquired 41 business which includes 30 pest control, eight Hygiene, three Protect & Enhance, both in Growth and Emerging markets. Â

The second possible reason for the rising of share price could be due to coronavirus as the demand of the company’s products is expected to rise because the company is a provider of pest control hygienic products. As per the company financial report, the Group customer enquiries for hand-sanitising and handwashing services have been very robust.

FTSE 100 index movement (Source: Thomson Reuters)

Further to this, the spread of the coronavirus has also impacted London stock Exchange with the FTSE 100 index having declined significantly from the period of 24th February to 28^th February 2020. Also because of the increasing death counts across the globe, the international equity markets are facing big selloffs since 24th February 2020. Many of the FTSE sectors are battered such as consumer staples, consumer discretionary, financial and energy sectors.

As per the company report its China operations have been impacted because of this virus. Meanwhile, the company anticipates the minor net impact on the business in the first quarter of the year 2020. Lastly, the company further stated that existing stocks provide cover most of the products obtained from dealers in China for the next few months.

RTO - Rentokil Initial Plc

Rentokil Initial Plc (LON:RTO) delivers services that enhance the quality of lives of people and protect them. The company helps people to get protection from pest-borne diseases as well as from the ill-effects of bad hygiene. The company has more than 1,800 local services teams all over the globe. The team covers approximately 91 per cent of international Gross Domestic Product of the world in more than ninety of the world’s hundred biggest cities throughout the United Kingdom, Europe, North America, Asia & Pacific and the rest of the world. The company has more than one million consumers in the world, from food production companies and pharmaceutical to local shops, restaurants and homes.

RTO – Financial Highlights

On 27th February 2020, the company announced its financial statement for the year ended 31st December 2019.

The company’s revenue increased to £2,714.4 million in the year 2019 as compared to £2,472.3 million in the year 2018. The operating profit increased to £265.6 million in the year 2019 as compared to £245.5 million in the year 2018. The profit/(loss) before interest and income tax increased to £369.4 million in the year 2019 as compared to a loss of £96.1 million in the year 2018. The Profit/(loss) before income tax also increased £338.5 million versus a loss of £114.1 million in the year 2018.

The Profit/(loss) for the year attributable to the company's equity holders (including non-controlling interests of £0.3 million (2018: £0.2 million)) increased significantly to £283.8 million in the year 2019 as compared to a loss of £98.3 million in the year 2018. Total comprehensive income for the year increased substantially to £234.5 million in the year 2019 as compared to a loss of £54.0 million in the year 2018.

The basic earnings per share attributable to the company's equity holders increased to 15.33 pence as compared to a loss of 5.35 pence in the year 2018. The diluted earnings per share attributable to the company's equity holders increased to 15.24 pence as compared to a loss of 5.35 pence in the year 2018.

The dividend per share was reported at 5.15 pence per share in the financial year 2019, a growth of 15.2 per cent over the prior year.

The total non-current assets increased to £2,468.7 million in the year 2019 as compared to £2,340.0 million in the year 2018. The total current assets increased to £925.7 million versus £741.5 million in the year 2018. In contrast, the total non-current liabilities also increased to £1,467.3 million versus £1,004.3 million in the year 2018.

RTO – Share price performance

On 03rd March 2020, at around 09:11 AM (GMT), by the time of writing this report, the stock of Rentokil Initial Plc traded at a price of GBX 532.20 per share on the London Stock Exchange, an increase in the value of around 3.70 per cent or GBX 19.0 per share, as opposed to the closing price of the stock on the previous trading day, which has been reported to be at GBX 513.20 per share.

At the time of writing, the market capitalisation of Rentokil Initial Plc was GBP 9.49 billion with regards to the current market price of the stock. The free float and outstanding shares of Rentokil Initial Plc were reported at 1.82 billion and 1.85 billion, respectively.

The share price of Rentokil Initial Plc recorded at GBX 535.20 as on 03rd March 2020 was its 1-year peak price, whereas the share price recorded at GBX 343.40 as on 25^th March 2019 was the 1-year low share price. The current share price was lower by 0.56 per cent from the 1-year high price, whereas the current share price was higher by 54.97 per cent from the 1-year low price.

The beta of the stock has been reported at a value of 0.66, representing the fact that the movement of the share price of the company has lower volatility as compared with the movement in the comparative benchmark index.