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Republic Services (RSG) Hits 52-Week High on Core Focus
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Shares of waste management firm Republic Services, Inc. (RSG - Free Report) scaled a new 52-week high of $64.86 during Friday’s trading session, before closing a tad lower at $64.68 for a healthy one-year return of 31.9%. Barring minor hiccups, Republic Services’ share price has steadily been on an uptrend since November last year. This Zacks Rank #2 (Buy) stock has the potential for further price appreciation with long-term earnings growth expectation of 9.2%.
Growth Drivers
Republic Services is currently focusing on increasing its operational efficiency by shifting to compressed natural gas collection vehicles and converting rear-loading trucks to automated-side loaders, which will reduce cost and improve profitability. Republic Services is also focused on enhancing its operations by streamlining the cost structure, improving revenue quality and seeking growth through profitable investment opportunities.
In addition, the company is realigning its field support functions by combining two organizational layers. It expects these initiatives to contribute approximately $25 million to annual cost savings from 2018. As part of the realignment program, the company centralized the management structure for recycling operations. The new organizational structure is likely to ensure a clear ownership for the recycling and processing market vertical.
With a diligent execution of operational plans, Republic Services’ shares have performed relatively better than the Zacks categorized Waste Removal Services industry with an average year-to-date return of 13.4% compared with a 9.9% gain for the latter. The company is focusing on a series of quality acquisition opportunities, primarily of recycling assets, which are likely to act as a catalyst for a healthy long-term growth in its top 25 markets. Republic Services is also transitioning to a fee-based recycling processing model to cover processing costs and generate a healthy ROI (return on investment).
Moving forward, Republic Services continues to focus on prudent investment decisions for a disciplined capital allocation, strong and flexible balance sheet position and cash flow enhancement to support dividend growth. Over the years, the company has returned significant cash to its shareholders as dividends or share repurchases to reward them with risk-adjusted returns. In addition, the company has also historically promulgated a conservative balance sheet with a healthy liquidity position. Such moves, along with a robust operating platform and an efficient management team will likely help in the execution of its strategic priorities and drive net asset value in the future.
All these factors probably raised investor confidence and drove the company’s shares to a fresh 52-week high.
Advanced Disposal Services topped earnings estimates twice in the trailing four quarters with a stellar positive surprise of 227.8%.
Waste Management has a long-term earnings growth expectation of 9.5%. It topped estimates twice in the trailing four quarters with an average positive earnings surprise of 1.7%.
CBIZ surpassed estimates twice in the trailing four quarters with an average positive earnings surprise of 18.4%.
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Republic Services (RSG) Hits 52-Week High on Core Focus
Shares of waste management firm Republic Services, Inc. (RSG - Free Report) scaled a new 52-week high of $64.86 during Friday’s trading session, before closing a tad lower at $64.68 for a healthy one-year return of 31.9%. Barring minor hiccups, Republic Services’ share price has steadily been on an uptrend since November last year. This Zacks Rank #2 (Buy) stock has the potential for further price appreciation with long-term earnings growth expectation of 9.2%.
Growth Drivers
Republic Services is currently focusing on increasing its operational efficiency by shifting to compressed natural gas collection vehicles and converting rear-loading trucks to automated-side loaders, which will reduce cost and improve profitability. Republic Services is also focused on enhancing its operations by streamlining the cost structure, improving revenue quality and seeking growth through profitable investment opportunities.
In addition, the company is realigning its field support functions by combining two organizational layers. It expects these initiatives to contribute approximately $25 million to annual cost savings from 2018. As part of the realignment program, the company centralized the management structure for recycling operations. The new organizational structure is likely to ensure a clear ownership for the recycling and processing market vertical.
With a diligent execution of operational plans, Republic Services’ shares have performed relatively better than the Zacks categorized Waste Removal Services industry with an average year-to-date return of 13.4% compared with a 9.9% gain for the latter. The company is focusing on a series of quality acquisition opportunities, primarily of recycling assets, which are likely to act as a catalyst for a healthy long-term growth in its top 25 markets. Republic Services is also transitioning to a fee-based recycling processing model to cover processing costs and generate a healthy ROI (return on investment).
Moving forward, Republic Services continues to focus on prudent investment decisions for a disciplined capital allocation, strong and flexible balance sheet position and cash flow enhancement to support dividend growth. Over the years, the company has returned significant cash to its shareholders as dividends or share repurchases to reward them with risk-adjusted returns. In addition, the company has also historically promulgated a conservative balance sheet with a healthy liquidity position. Such moves, along with a robust operating platform and an efficient management team will likely help in the execution of its strategic priorities and drive net asset value in the future.
All these factors probably raised investor confidence and drove the company’s shares to a fresh 52-week high.
Other Stocks to Consider
Some other stocks in the industry worth considering include Advanced Disposal Services, Inc. , Waste Management Inc. (WM - Free Report) and CBIZ, Inc. (CBZ - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Advanced Disposal Services topped earnings estimates twice in the trailing four quarters with a stellar positive surprise of 227.8%.
Waste Management has a long-term earnings growth expectation of 9.5%. It topped estimates twice in the trailing four quarters with an average positive earnings surprise of 1.7%.
CBIZ surpassed estimates twice in the trailing four quarters with an average positive earnings surprise of 18.4%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana. Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>