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While the FTSE 100 has made a positive start to 2025, shares in Rentokil Initial (LSE:RTO) are down almost 20%. In my view, that puts them in bargain territory – and I’ve been buying as a result.
At a price-to-earnings (P/E) ratio of around 27, the stock looks expensive. But I think things could look very different a couple of years from now, which is why I’ve decided to add to my investment.
First sight: expensive
A first look at Rentokil doesn’t stand out as a bargain. It trades at a P/E ratio of 27 and – alarmingly – its earnings per share have declined from 15.3p in 2019 to 12.1p in 2024.
That’s very much not the direction things are supposed to be going in. Especially not with the likes of Alphabet (25) and Meta (22) trading at meaningfully lower multiples while growing.
Rentokil shares come with a bigger dividend – at today’s prices, the yield is…
