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Why You Should Retain Republic Services (RSG) Stock for Now
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Republic Services, Inc. (RSG - Free Report) has had an impressive run over the past six months. The stock gained 15.4%, outperforming the 8.1% rally of the industry it belongs to and the 15.1% rise of the Zacks S&P 500 composite.
RSG has an impressive Growth Score of A. 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 6.1% and 11.2%, respectively, on a year-over-year basis. It has a long-term (three-five years) expected earnings growth rate of 9.6%.
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 20.6% year over year in the first quarter of 2023.
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, it 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 first-quarter 2023 was 0.74, lower than the prior-year quarter's figure of 0.75. 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 the following better-ranked stocks:
The company has an impressive earnings surprise history, beating the consensus mark in three of the trailing four quarters and missing once, the average surprise being 9.6%.
Green Dot (GDOT - Free Report) : GDOT currently carries a Zacks Rank #2 (Buy) and has a VGM Score of A.
The company has an impressive earnings surprise history, beating the Zacks Consensus Estimate in all the trailing four quarters, with an average surprise of 37.3%.
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Why You Should Retain Republic Services (RSG) Stock for Now
Republic Services, Inc. (RSG - Free Report) has had an impressive run over the past six months. The stock gained 15.4%, outperforming the 8.1% rally of the industry it belongs to and the 15.1% rise of the Zacks S&P 500 composite.
RSG has an impressive Growth Score of A. 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 6.1% and 11.2%, respectively, on a year-over-year basis. It has a long-term (three-five years) expected earnings growth rate of 9.6%.
Republic Services, Inc. Price
Republic Services, Inc. price | Republic Services, Inc. Quote
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 20.6% year over year in the first quarter of 2023.
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, it 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 first-quarter 2023 was 0.74, lower than the prior-year quarter's figure of 0.75. 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 the following better-ranked stocks:
Maximus (MMS - Free Report) : MMS sports a Zacks Rank of 1 (Strong Buy) at present and has a VGM Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company has an impressive earnings surprise history, beating the consensus mark in three of the trailing four quarters and missing once, the average surprise being 9.6%.
Green Dot (GDOT - Free Report) : GDOT currently carries a Zacks Rank #2 (Buy) and has a VGM Score of A.
The company has an impressive earnings surprise history, beating the Zacks Consensus Estimate in all the trailing four quarters, with an average surprise of 37.3%.