Rentokil InitialNYSE: RTO

Investors interested in Business - Services stocks are likely familiar with Rentokil Initial PLC (RTO) and UL Solutions Inc. (ULS). But which of these two stocks presents investors with the better value opportunity right now?

Rentokil Initial PLC (LSE:RTO) was one of the top FTSE 100 risers in early trading, up 1.8%, after RBC Capital Markets summed up the situation as the pest control group continues with the integration of Terminix (TMX), its major North American acquisition from late 2022.  The shares have been "very volatile", analysts at the London arm of the Canadian bank said, after the company issued a profit warning last autumn due to softer US trading.

Activist Trian has amassed a sizable stake in Rentokil, and there are a few options to create value.

Rentokil Initial's stagnant stock got a 14% fillip from activist investor Nelson Peltz's investment a few days ago. The investment comes at a time when it has a growth plan in place for its important North American market, while it continues integration with Terminix post the 2022 acquisition. Even if it weren't to see any fruits from either Peltz's investment, its growth plan, or integration, however, the stock's forward non-GAAP P/E still isn't bad, indicating the potential upside.

Rentokil's recovery might be fast-tracked following the appearance on the share register of US billionaire Nelson Peltz, suggest analysts at US bank Jefferies. The bank was already keen on the pest control group due to earnings upside from synergies and the underlying earnings power of the combined Rentokil/Terminix business, improving momentum and material valuation upside as integration risk falls.

American depositary receipts (ADRs) of Rentokil Initial Plc (RTO) skyrocketed Wednesday when activist investor Nelson Peltz's Trian Partners took a large stake in the British pest control firm that also owns the Terminix brand in the U.S. and others.

Nelson Peltz's Trian has a top-10 position in Terminix-parent Rentokil and is looking to work with management to increase shareholder value. Rentokil shares have fallen by more than a third in the last year, as the company grapples with a softening consumer.

Rentokil is a top player in the pest control sector, holding a 21% share of the worldwide market. The pest control industry is projected to grow to $42.5 billion by 2032, offering lucrative opportunities. Despite some hurdles after acquiring Terminix, Rentokil shows promising growth potential for investors with a long-term perspective.

Rentokil Initial PLC (LSE:RTO) reported a 4.9% increase in revenues in the first quarter, or 3.1% organic growth excluding the impact of acquisitions such as HiCare in India. The company noted that North American growth showed signs of stabilization, with organic revenues increasing by 1.5% in the region.