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Reasons Why You Should Retain Republic Services (RSG) Stock

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Republic Services, Inc. (RSG - Free Report) has an impressive Growth Score of B. This style score condenses all the essential metrics from the company’s financial statements to get a true sense of the quality and sustainability of its growth.

The company’s earnings for 2022 and 2023 are expected to grow at a rate of 5.1% and 11.6%, respectively, on a year-over-year basis.

Factors That Augur Well

Being a leading waste disposal company, Republic Services is expected to continue benefiting from ongoing trends like increasing environmental concerns, rapid industrialization, increase in population and active government measures to reduce illegal dumping. The company remains focused on expanding its recycling volume through improved material handling processes and programs. RSG developed its first Polymer Center last year to increase the recycling of plastics across North America. The company’s top line increased 19.5% year over year in the third quarter of 2022.

Republic Services is focused on increasing its operational efficiency and reducing fleet operating costs by shifting to compressed natural gas (CNG) collection vehicles. In 2022, around 20% of the company’s recycling and solid waste collection fleet operated on CNG and 17% of its replacement recycling and solid waste vehicle purchases were CNG vehicles.

Republic Services puts consistent efforts into rewarding its shareholders through dividend payments and share repurchases. In 2022, 2021 and 2020, the company paid $592.9 million, $552.6 million and $522.5 million in dividends and repurchased shares worth $203.5 million, $252.2 million and $98.8 million, respectively. Such moves indicate the company’s commitment to creating value for shareholders and underline its confidence in its business. These initiatives not only instill investors’ confidence but also positively impact earnings per share.

Some Risks

Republic Services' current ratio (a measure of liquidity) at the end of fourth-quarter 2022 was 0.70, lower than its prior-year quarter's figure of 0.71. A decline in the current ratio is not desirable as it indicates that the company may have problems meeting its short-term debt obligations.

Zacks Rank and Stocks to Consider

Republic Services currently carries a Zacks Rank #3 (Hold).

Investors interested in the Zacks Business Services sector can consider better-ranked stocks like Omnicom Group (OMC - Free Report) and ICF International (ICFI - Free Report) .

The Zacks Consensus Estimate for OMC’s first-quarter 2023 earnings is pegged at $1.39, which has been revised downward by 2.1% in the past 60 days. The consensus estimate for the full year is $7.15 per share. This has been revised 13.7% upward in the past 60 days.

For first-quarter 2023, earnings are expected to match the year-ago reported figure. Earnings are expected to grow 3.2% on a year-over-year basis in 2023. The company currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

For first-quarter 2023, ICFI’s earnings are expected to register 7.6% growth on a year-over-year basis. For 2023, the company’s earnings are expected to grow 9.2% on a year-over-year basis.

The Zacks Consensus Estimate for the company’s first-quarter 2023 earnings is pegged at $1.41, which has been revised upward by 6% in the past 60 days. The consensus estimate for the full year is $6.3 per share. This has been revised 7.3% upward in the past 60 days. The company currently carries a Zacks Rank #2 (Buy).


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