Rentokil Initial

Rentokil Initial has been heavily punished by investors, with shares recently around 335 pence, roughly 34% below the 52 week high. At first glance, the decline looks alarming. But underneath the selloff is a profitable company facing a difficult turnaround, which makes the current valuation worth examining. First half 2026 revenue increased 6.7% to $3.59 billion, while adjusted operating profit rose 6.6%. The adjusted operating margin improved to 15.5%, and free cash flow increased 12.8%. Net debt also declined to $3.58 billion. However, North American growth weakened, and management abandoned its previous target of reaching a 20% margin there by 2027, choosing instead to reinvest in sales and operations. That decision is a major reason the stock fell sharply after the July results. Investors now expect slower margin improvement and are questioning how quickly North America can recover. The dividend remains a positive: the latest annual payout was increased by 3%, continuing a long record of shareholder distributions. The opportunity is a recovery in North American customer demand and margins. Risks include weak growth, higher costs, debt and prolonged execution problems. After such a large decline, a recovery is possible, but the market will likely demand evidence that the turnaround is working. This review is for informational and educational purposes only, not financial advice.