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RSG or ADSW: Which Waste Removal Stock is a Better Buy Now?
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The coronavirus outbreak has necessitated the proper disposal of trash. In fact, waste management companies are at an advantage in situations such as the recent one as healthcare officials have to dispose of used masks, gloves, suits, syringes and other medical equipment properly to curb the spread of infection. Government initiatives as well as stringent rules and regulations to advance sustainable waste management mechanisms and put a check on illegal dumping are also expected to aid the industry.
Growing adoption of recycling techniques, and development of technologies and advanced waste collection solutions are key trends within the industry. Recycling remains a major growth area, with most industry players undertaking municipal solid waste and non-hazardous industrial waste recycling measures. Rising environmental concerns, rapid industrialization, increase in population and an expected increase in non-hazardous waste as a result of rapid economic growth should enhance business opportunities for waste management companies.
The Zacks Waste Removal Services industry currently carries a Zacks Industry Rank #115, which places it in the top 46% of more than 250 Zacks industries and indicates solid near-term growth prospects.
Given this encouraging backdrop, it is not a bad idea to undertake a comparative analysis of two waste removal services industry stocks — Republic Services Inc. (RSG - Free Report) and Advanced Disposal Services, Inc. . Both the stocks are part of the broader Zacks Business Services sector (one of the 16 Zacks sectors). While market capitalization of Republic Services is $29.59 billion, that of Advanced Disposal Services is $2.73 billion.
Let’s delve deeper to find out which company is better positioned for investment.
However, with an attractive VGM Score of B, Advanced Disposal Services enjoys an edge over Republic Services, which has a VGM Score of C. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores.
Price Performance
Republic Services clearly scores over Advanced Disposal Services in terms of price performance. In the past year, shares of Republic Services have gained 4.2% against decline of 7.1% for Advanced Disposal Services and 14.7% for the industry.
Earnings Surprise History
Earnings surprise history helps investors get an idea of a company’s performance in the previous quarters.
Both Republic Services and Advanced Disposal Services have an impressive earnings surprise history, with Republic Services’ bottom line surpassing the Zacks Consensus Estimate in each of the previous four quarters. Advanced Disposal Services’ bottom line beat the consensus mark in three of the previous four quarters.
However, Advanced Disposal Services delivered a higher four-quarter average earnings surprise of 267.9% compared with 11.8% for Republic Services.
Earnings Estimate Revisions
The direction of estimate revisions serves as an important pointer when it comes to the price of a stock.
Over the past 60 days, the Zacks Consensus Estimate for Advanced Disposal Services’ current-quarter earnings has risen 33.3% compared with an increase of 15.5% for Republic Services. For 2020, Advanced Disposal Services’ earnings estimates have improved more than 100% compared with an increase of 14.1% for Republic Services. For 2021, Advanced Disposal Services’ earnings estimates have improved 10.8% compared with an increase of 9% for Republic Services.
Based on quarterly and yearly earnings estimate revisions in the past 60 days, Advanced Disposal Services is better placed than Republic Services.
Valuation
EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization) ratio is the commonly used metric for valuing waste removal services stocks because of their high debt levels.
We observe that Republic Services and Advanced Disposal Services have EV/EBITDA ratios of 13 and 10.3, respectively compared with the industry’s figure of 10.7. Advanced Disposal Services has an edge with a lower EV/EBITDA value.
Bottom Line
Our comparative analysis shows that Advanced Disposal Services has an advantage over Republic Services in terms of VGM Score, earnings estimate revisions and earnings surprise history.
Republic Services scores over Advanced Disposal Services in terms of price performance over the past year. This faster share price rally, however, has led to a rich valuation for the company compared with Advanced Disposal Services.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
RSG or ADSW: Which Waste Removal Stock is a Better Buy Now?
The coronavirus outbreak has necessitated the proper disposal of trash. In fact, waste management companies are at an advantage in situations such as the recent one as healthcare officials have to dispose of used masks, gloves, suits, syringes and other medical equipment properly to curb the spread of infection. Government initiatives as well as stringent rules and regulations to advance sustainable waste management mechanisms and put a check on illegal dumping are also expected to aid the industry.
Growing adoption of recycling techniques, and development of technologies and advanced waste collection solutions are key trends within the industry. Recycling remains a major growth area, with most industry players undertaking municipal solid waste and non-hazardous industrial waste recycling measures. Rising environmental concerns, rapid industrialization, increase in population and an expected increase in non-hazardous waste as a result of rapid economic growth should enhance business opportunities for waste management companies.
The Zacks Waste Removal Services industry currently carries a Zacks Industry Rank #115, which places it in the top 46% of more than 250 Zacks industries and indicates solid near-term growth prospects.
Given this encouraging backdrop, it is not a bad idea to undertake a comparative analysis of two waste removal services industry stocks — Republic Services Inc. (RSG - Free Report) and Advanced Disposal Services, Inc. . Both the stocks are part of the broader Zacks Business Services sector (one of the 16 Zacks sectors). While market capitalization of Republic Services is $29.59 billion, that of Advanced Disposal Services is $2.73 billion.
Let’s delve deeper to find out which company is better positioned for investment.
Zacks Rank & Style Score
Currently, both the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
However, with an attractive VGM Score of B, Advanced Disposal Services enjoys an edge over Republic Services, which has a VGM Score of C. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores.
Price Performance
Republic Services clearly scores over Advanced Disposal Services in terms of price performance. In the past year, shares of Republic Services have gained 4.2% against decline of 7.1% for Advanced Disposal Services and 14.7% for the industry.
Earnings Surprise History
Earnings surprise history helps investors get an idea of a company’s performance in the previous quarters.
Both Republic Services and Advanced Disposal Services have an impressive earnings surprise history, with Republic Services’ bottom line surpassing the Zacks Consensus Estimate in each of the previous four quarters. Advanced Disposal Services’ bottom line beat the consensus mark in three of the previous four quarters.
However, Advanced Disposal Services delivered a higher four-quarter average earnings surprise of 267.9% compared with 11.8% for Republic Services.
Earnings Estimate Revisions
The direction of estimate revisions serves as an important pointer when it comes to the price of a stock.
Over the past 60 days, the Zacks Consensus Estimate for Advanced Disposal Services’ current-quarter earnings has risen 33.3% compared with an increase of 15.5% for Republic Services. For 2020, Advanced Disposal Services’ earnings estimates have improved more than 100% compared with an increase of 14.1% for Republic Services. For 2021, Advanced Disposal Services’ earnings estimates have improved 10.8% compared with an increase of 9% for Republic Services.
Based on quarterly and yearly earnings estimate revisions in the past 60 days, Advanced Disposal Services is better placed than Republic Services.
Valuation
EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization) ratio is the commonly used metric for valuing waste removal services stocks because of their high debt levels.
We observe that Republic Services and Advanced Disposal Services have EV/EBITDA ratios of 13 and 10.3, respectively compared with the industry’s figure of 10.7. Advanced Disposal Services has an edge with a lower EV/EBITDA value.
Bottom Line
Our comparative analysis shows that Advanced Disposal Services has an advantage over Republic Services in terms of VGM Score, earnings estimate revisions and earnings surprise history.
Republic Services scores over Advanced Disposal Services in terms of price performance over the past year. This faster share price rally, however, has led to a rich valuation for the company compared with Advanced Disposal Services.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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