Spruce Point has short position in Rollins, says issues to pressure margins

Spruce Point, in a research note, writes that after conducting a forensic financial review of Rollins, the firm believes there are “multiple” long-term macroeconomic and microeconomic issues that are likely to pressure Rollins’ historical growth and margins. The firm, which has a short position, estimates a 30%-405% downside risk, or $21.75 -$25.40 per share. Spruce Point highlighted several key concerns with the company, including industry competition, evidence of new challenges with Rollins’ M&A growth strategy, multiple tailwinds that are becoming headwinds, and charges by the SEC for improper earnings management and also changed auditors.