Shares of Republic Services (RSG - Free Report) have been strong performers lately, with the stock up 5.9% over the past month. The stock hit a new 52-week high of $118.91 in the previous session. Republic Services has gained 22.5% since the start of the year compared to the -15.7% move for the Zacks Business Services sector and the 7.8% return for the Zacks Waste Removal Services industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on July 29, 2021, Republic Services reported EPS of $1.09 versus consensus estimate of $0.94.
For the current fiscal year, Republic Services is expected to post earnings of $4.02 per share on $10.97 billion in revenues. This represents a 12.92% change in EPS on an 8.03% change in revenues. For the next fiscal year, the company is expected to earn $4.39 per share on $11.48 billion in revenues. This represents a year-over-year change of 9.2% and 4.67%, respectively.
Valuation Metrics
Republic Services may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Republic Services has a Value Score of C. The stock's Growth and Momentum Scores are C and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 29.3X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 16.4X versus its peer group's average of 13.4X. Additionally, the stock has a PEG ratio of 2.92. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Republic Services currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Republic Services fits the bill. Thus, it seems as though Republic Services shares could have a bit more room to run in the near term.
How Does Republic Services Stack Up to the Competition?
Shares of Republic Services have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including US Ecology , Stericycle (SRCL - Free Report) , and Clean Harbors (CLH - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 31% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Republic Services, even beyond its own solid fundamental situation.
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Shares of Republic Services (RSG - Free Report) have been strong performers lately, with the stock up 5.9% over the past month. The stock hit a new 52-week high of $118.91 in the previous session. Republic Services has gained 22.5% since the start of the year compared to the -15.7% move for the Zacks Business Services sector and the 7.8% return for the Zacks Waste Removal Services industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on July 29, 2021, Republic Services reported EPS of $1.09 versus consensus estimate of $0.94.
For the current fiscal year, Republic Services is expected to post earnings of $4.02 per share on $10.97 billion in revenues. This represents a 12.92% change in EPS on an 8.03% change in revenues. For the next fiscal year, the company is expected to earn $4.39 per share on $11.48 billion in revenues. This represents a year-over-year change of 9.2% and 4.67%, respectively.
Valuation Metrics
Republic Services may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Republic Services has a Value Score of C. The stock's Growth and Momentum Scores are C and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 29.3X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 16.4X versus its peer group's average of 13.4X. Additionally, the stock has a PEG ratio of 2.92. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Republic Services currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Republic Services fits the bill. Thus, it seems as though Republic Services shares could have a bit more room to run in the near term.
How Does Republic Services Stack Up to the Competition?
Shares of Republic Services have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including US Ecology , Stericycle (SRCL - Free Report) , and Clean Harbors (CLH - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 31% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Republic Services, even beyond its own solid fundamental situation.
Free Report – The Bitcoin Profit Phenomenon
Zacks Investment Research has released a Special Report to help you pursue massive profits from the world’s first and largest decentralized form of money.
No guarantees for the future, but in the past three presidential election years, Bitcoin’s returns were as follows: 2012 +272.4%, 2016 +161.1%, and 2020 +302.8%.
Zacks predicts another significant surge. Click below for Bitcoin: A Tumultuous Yet Resilient History.
Download Now – Today It’s FREE >>
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