Financial Analysis: Layne Christensen (LAYN) vs. Rollins (ROL)

Layne Christensen (NASDAQ: LAYN) and Rollins (NYSE:ROL) are both construction companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, risk, valuation, dividends, analyst recommendations, earnings and institutional ownership.

Insider & Institutional Ownership

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95.0% of Layne Christensen shares are owned by institutional investors. Comparatively, 38.1% of Rollins shares are owned by institutional investors. 12.0% of Layne Christensen shares are owned by company insiders. Comparatively, 56.3% of Rollins shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Layne Christensen and Rollins’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Layne Christensen -12.73% -40.46% -6.33%
Rollins 10.70% 29.76% 18.71%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Layne Christensen and Rollins, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Layne Christensen 0 1 0 0 2.00
Rollins 0 1 3 0 2.75

Layne Christensen presently has a consensus price target of $11.00, suggesting a potential downside of 26.27%. Rollins has a consensus price target of $43.00, suggesting a potential downside of 15.74%. Given Rollins’ stronger consensus rating and higher possible upside, analysts plainly believe Rollins is more favorable than Layne Christensen.

Valuation and Earnings

This table compares Layne Christensen and Rollins’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Layne Christensen $601.97 million 0.49 -$52.23 million ($1.76) -8.48
Rollins $1.67 billion 6.65 $179.12 million $0.87 58.66

Rollins has higher revenue and earnings than Layne Christensen. Layne Christensen is trading at a lower price-to-earnings ratio than Rollins, indicating that it is currently the more affordable of the two stocks.

Dividends

Rollins pays an annual dividend of $0.56 per share and has a dividend yield of 1.1%. Layne Christensen does not pay a dividend. Rollins pays out 64.4% of its earnings in the form of a dividend. Rollins has increased its dividend for 14 consecutive years.

Risk & Volatility

Layne Christensen has a beta of 0.43, meaning that its stock price is 57% less volatile than the S&P 500. Comparatively, Rollins has a beta of 0.21, meaning that its stock price is 79% less volatile than the S&P 500.

Summary

Rollins beats Layne Christensen on 14 of the 17 factors compared between the two stocks.

Layne Christensen Company Profile

Layne Christensen Company operates as a water management, construction, and drilling company that provides solutions for the water, mineral, and energy markets in the United States and internationally. The company's Water Resources segment offers water-related products and services, including hydrologic design and construction; source of supply exploration; well and intake construction; and well and pump rehabilitation services. This segment also provides water treatment equipment engineering services and systems for the treatment of regulated and nuisance contaminants. Its Inliner segment provides process, sanitary, and storm water rehabilitation solutions to municipalities and industrial customers dealing with aging infrastructure needs, as well as other rehabilitative methods, such as Janssen structural renewal for service lateral connections and mainlines, slip lining, traditional excavation and replacement, and manhole renewal with cementitious and epoxy products. The company's Heavy Civil segment offers water and wastewater treatment plants design and construction, and pipeline installation services; provides surface water intakes, pumping stations, and hard rock tunnels; offers marine construction services; and designs and constructs biogas facilities. Its Mineral Services segment conducts above ground drilling activities comprising core drilling, reverse circulation, dual tube, hammer, and rotary air-blast methods; and provides exploratory and definition drilling services. The company serves government agencies, investor-owned utilities, industrial companies, global mining companies, consulting engineering firms, heavy civil construction contractors, oil and gas companies, power companies, and agribusinesses. The company was formerly known as Layne Inc. and changed its name to Layne Christensen Company in June 1996. Layne Christensen Company was founded in 1882 and is headquartered in The Woodlands, Texas.

Rollins Company Profile

Rollins, Inc. is a service company, which operates in pest and termite control business segment. The Company, through its subsidiaries, provides its services to both residential and commercial customers in North America, Australia, and Europe with international franchises in Central America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa, Canada, Australia, and Mexico. The Company’s subsidiaries include Orkin LLC. (Orkin), Western Pest Services (Western), The Industrial Fumigant Company, LLC (IFC), HomeTeam Pest Defense (HomeTeam), Rollins Australia and Rollins Wildlife Services. Orkin either serves customers, directly or through franchises operations, in the United States, Canada, Central America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa and Mexico, providing pest control services and protection against termite damage, rodents and insects to homes and businesses, including hotels and food service establishments.

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