Financial Analysis: Rentokil Initial (NYSE:RTO) versus Secom (OTCMKTS:SOMLY)

Rentokil Initial (NYSE:RTO) and Secom (OTCMKTS:SOMLY) are both large-cap business services companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.

Risk and Volatility

Rentokil Initial has a beta of 1.02, meaning that its stock price is 2% more volatile than the S&P 500. Comparatively, Secom has a beta of 0.3, meaning that its stock price is 70% less volatile than the S&P 500.

Institutional & Insider Ownership

9.9% of Rentokil Initial shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Rentokil Initial pays an annual dividend of $0.72 per share and has a dividend yield of 2.1%. Secom pays an annual dividend of $0.10 per share and has a dividend yield of 1.0%. Secom pays out 23.3% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Rentokil Initial and Secom, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rentokil Initial	2	3	6	1	2.50
Secom	0	0	0	0	0.00

Rentokil Initial currently has a consensus price target of $34.50, suggesting a potential upside of 1.75%. Given Rentokil Initial’s stronger consensus rating and higher probable upside, analysts clearly believe Rentokil Initial is more favorable than Secom.

Profitability

This table compares Rentokil Initial and Secom’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rentokil Initial	N/A	N/A	N/A
Secom	8.60%	7.50%	5.08%

Valuation & Earnings

This table compares Rentokil Initial and Secom”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rentokil Initial	$6.91 billion	2.48	$470.00 million	N/A	N/A
Secom	$7.88 billion	2.27	$713.52 million	$0.43	22.30

Secom has higher revenue and earnings than Rentokil Initial.

Summary

Rentokil Initial beats Secom on 9 of the 14 factors compared between the two stocks.

About Rentokil Initial

Rentokil Initial plc, together with its subsidiaries, provides route-based services in North America, the United Kingdom, rest of Europe, Asia, the Pacific, and internationally. It offers a range of pest control services for rodents, and flying and crawling insects, as well as other forms of wildlife management for commercial customers. The company provides hygiene services, including the provision and maintenance of products, such as soap and hand sanitizer dispensers, hand dryers, air care and purification, cubicle and surface sanitizers, feminine hygiene units, toilet paper dispensers, and floor protection mats. In addition, it engages in the supply and maintenance of workwear and protective equipment. Further, the company offers property care services; and provides a range of specialist cleaning services, such as graffiti removal deep cleaning of kitchens and washrooms, trauma cleaning, and flood or fire damage cleaning, as well as specialist medical and hygiene services. Rentokil Initial plc was founded in 1903 and is headquartered in Crawley, the United Kingdom.

About Secom

SECOM CO., LTD., together with its subsidiaries, provides security services in Japan and internationally. The company operates through Security Services, Fire Protection Services, Medical Services, Insurance Services, Geospatial Information Services, BPO and ICT Services, and Other Services. The Security Services segment offers static guard, armored car, merchandise, and other services, as well as online security systems. The Fire Protection Services segment provides fire alarm systems, fire extinguishing systems, and maintenance services to office buildings, production facilities, tunnels, cultural properties, ships, and residences. The Medical Services segment offers home nursing, pharmaceutical dispensing, home delivery services, health and preventative care services, and personal and outpatient care services; and cloud-based medical reporting services and SECOM LINKus application. This segment also operates the general hospital and residences for seniors; and sells medical equipment and pharmaceuticals. The Insurance Services Segment provides fire insurance, automobile insurance, and cancer treatment insurance services. The Geospatial Information Services segment offers geospatial information services to public-sector entities, such as national and local governments; private sector customers; and overseas government agencies. The BPO and ICT Services segment provides contact centers and back office support services, data center, disaster preparedness, information security, and cloud-based services, as well as SaaS solutions. The Other Services segment offers real estate leasing, construction, and installation services. The company was incorporated in 1962 and is headquartered in Tokyo, Japan.