Financial Analysis: Rentokil Initial (NYSE:RTO) & ABM Industries (NYSE:ABM)

ABM Industries (NYSE:ABM) and Rentokil Initial (NYSE:RTO) are both business services companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, analyst recommendations, risk, profitability, earnings, valuation and dividends.

Analyst Ratings

This is a summary of recent ratings and recommmendations for ABM Industries and Rentokil Initial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ABM Industries	0	3	2	0	2.40
Rentokil Initial	2	1	1	1	2.20

ABM Industries presently has a consensus price target of $55.67, indicating a potential upside of 19.49%. Given ABM Industries’ stronger consensus rating and higher possible upside, analysts plainly believe ABM Industries is more favorable than Rentokil Initial.

Dividends

ABM Industries pays an annual dividend of $1.06 per share and has a dividend yield of 2.3%. Rentokil Initial pays an annual dividend of $0.33 per share and has a dividend yield of 1.2%. ABM Industries pays out 57.6% of its earnings in the form of a dividend. Rentokil Initial pays out 21.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. ABM Industries has raised its dividend for 59 consecutive years. ABM Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

91.6% of ABM Industries shares are held by institutional investors. Comparatively, 9.9% of Rentokil Initial shares are held by institutional investors. 0.9% of ABM Industries shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

ABM Industries has a beta of 0.78, indicating that its share price is 22% less volatile than the S&P 500. Comparatively, Rentokil Initial has a beta of 0.95, indicating that its share price is 5% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
ABM Industries	1.34%	12.12%	4.18%
Rentokil Initial	N/A	N/A	N/A

Earnings and Valuation

This table compares ABM Industries and Rentokil Initial”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ABM Industries	$8.36 billion	0.34	$81.40 million	$1.84	25.32
Rentokil Initial	$6.95 billion	1.92	$392.32 million	$1.51	17.50

Rentokil Initial has lower revenue, but higher earnings than ABM Industries. Rentokil Initial is trading at a lower price-to-earnings ratio than ABM Industries, indicating that it is currently the more affordable of the two stocks.

Summary

ABM Industries beats Rentokil Initial on 13 of the 18 factors compared between the two stocks.

About ABM Industries

ABM Industries Incorporated, through its subsidiaries, engages in the provision of integrated facility, infrastructure, and mobility solutions in the United States and internationally. It operates through Business & Industry, Manufacturing & Distribution, Education, Aviation, and Technical Solutions segments. The company offers janitorial, facilities engineering, and parking services for commercial real estate properties, including corporate offices for high tech clients, sports and entertainment venues, and traditional hospitals and non-acute healthcare facilities; provides vehicle maintenance and other services to rental car providers. It also offers integrated facility services, engineering, and other specialized services in various types of manufacturing, distribution, and data center facilities. In addition, the company delivers custodial and landscaping and grounds for public school districts, private schools, colleges, and universities. Further, it supports airlines and airports with services comprising passenger assistance, catering logistics, air cabin maintenance, and transportation services. Additionally, the company provides electric vehicle power design, installation, and maintenance, as well as microgrid systems installations. ABM Industries Incorporated was founded in 1909 and is headquartered in New York, New York.

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.