It has been about a month since the last earnings report for Republic Services (
RSG Quick Quote RSG - Free Report) . Shares have added about 2.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Republic Services due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Republic Services Q4 Earnings & Revenues Top Estimates
Republic Services reported impressive fourth-quarter 2022 results, with both earnings and revenues surpassing the respective Zacks Consensus Estimate.
Adjusted earnings (excluding 4 cents from non-recurring items) per share of $1.13 outpaced the Zacks Consensus Estimate by 10.8% and improved 10.8% year over year. Republic Services' average recycled commodity price per ton sold during the fourth quarter was $88. This represents a decrease from the third quarter of 2022 of $74 per ton and a decrease of $130 per ton over the prior year.
Quarterly revenues of $3.53 billion surpassed the Zacks Consensus Estimate by 2% and increased 19.5% year over year. Total internal growth plunged 16.2%, while revenues from acquisition surged more than 100%.
Revenues from Collection totaled $2.41 billion, up 12.6% year over year. Revenues (net) in the Transfer and Landfill segments amounted to $178.7 million and $382 million, rising 4.5% and 5.3%, respectively, year over year. Environmental solutions’ revenues (net) of $417.4 million surged more than 100% year over year. Other segment’s revenues of $142.6 million declined 22.5% year over year. Operating Results
Adjusted EBITDA margin of 27.3% declined 80 basis points from the prior-year quarter’s levels.
Operating income was $577.2 million, up 15.1% from the year-ago quarter’s levels. The operating income margin declined to 16.35% from the year-ago quarter’s figure of 16.98%. Total selling, general and administrative expenses were $395.3 million, up 25.3% from the year-ago quarter’s figure. Balance Sheet and Cash Flow
Republic Services exited fourth-quarter 2022 with cash and cash equivalents of $143.4 million compared with $81.4 million at the end of the prior quarter.
Long-term debt (net of current maturities) was $11.3 billion compared with $11.2 billion at the end of the prior quarter. RSG generated $806.6 million of cash from operating activities in the reported quarter. The adjusted free cash flow was $77.2 million. In the December quarter of 2022, RSG returned $156.4 million of total cash to its shareholders ($156.4 million of dividends paid). How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
At this time, Republic Services has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Republic Services has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.