Terminix’s 4Q Profit Spikes 163%; Shares Gain

Shares of Terminix Global Holdings were up 3.9% higher in Thursday’s extended trading session after the company reported a more than two-fold jump in its 4Q earnings. The stellar growth in its bottom-line reflects benefits from higher sales and improved productivity.

Terminix’s (TMX) 4Q adjusted earnings per share surged 162.5% to $0.21 year-on-year and surpassed analysts’ expectations of $0.10 by a wide margin.

The leading pest management company’s revenues grew 4% to $460 million and came in ahead of the consensus estimate of $453.3 million. Top-line growth reflects strong performance at Terminix’s Termite and Home Services, Residential Pest Management, and European Pest Management divisions. (See Terminix stock analysis on TipRanks)

Terminix reported adjusted EBITDA of $68 million in 4Q, up 24% year-over-year, reflecting higher revenues and lower direct, indirect and general and administrative costs.

For full-year 2021, the company forecasts revenues of between $2.025 billion and $2.05 billion, reflecting year-over-year growth in the range of 3%-4%.

Following the earnings release, Oppenheimer analyst Ian Zaffino reiterated a Buy rating and price target of $60 (30% upside potential).

In a note to investors, Zaffino wrote, “Overall, it was another solid quarter. Terminix continues to benefit from improved procedures, training, and technology, as well as from WFH (work-from-home) trends.” The analyst further stated, “Terminix offers significant upside, as management looks to improve customer retention and achieves long-term organic growth of 5% with +30% incremental margins.”

Consensus among analysts is a Moderate Buy based on 2 Buys and 1 Hold. The average analyst price target of $56 implies upside potential of about 21% from current levels. Shares have gained around 24% over the past year.

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