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Increasing Solid Waste Benefits Republic Services Amid Low Liquidity

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Key Takeaways

  • Republic Services posted Q2 EPS of $1.77, rising 9.9% y/y and topping estimates.
  • Solid waste growth boosts RSG's collection segment, which made up 68% of revenues over three quarters.
  • RSG invests in EV fleet and returns cash via dividends and buybacks despite liquidity pressures.

Republic Services (RSG - Free Report)  reported mixed second-quarter 2025 results. Earnings surpassed the Zacks Consensus Estimate, while revenues missed the same. RSG’s earnings per share (EPS) of $1.77 beat the Zacks Consensus Estimate by 1.1% and gained 9.9% from the year-ago quarter. Revenues of $4.2 billion missed the consensus mark by a slight margin but increased 4.6% year over year.

How Is Republic Services Faring?

Over the past three quarters, RSG generated 68% of its top line from its collection segment. Per the United Nations Environment Programme, municipal solid waste generation is expected to expand from 2.1 billion tons in 2023 to 3.8 billion tons by 2050. The upsurge in solid waste is anticipated to boost collection frequency, with the increased demand making people willing to pay more for disposal. This will allow Republic Services to charge higher subscription fees, enhancing its top line.

RSG’s strategy to adopt electric vehicles (EVs) significantly lowers the environmental impacts through a reduction in fleet emissions. Management anticipates an improvement in the total cost of ownership, providing a competitive edge. Partnerships for electric trucks, alongside the company’s existing 52 EVs and 22 charging facilities as of 2024, highlight its commitment to scaling electrification. RSG is poised to deploy EVs across its fleet, capitalizing on the potential to improve its market position as the technology advances.

Republic Services rewards shareholders through dividend payments and share repurchases. Despite the fluctuations in RSG’s cash position, this consistency has been maintained, underscoring its dedication to returning value to investors. In 2022, 2023 and 2024, the company paid out $592.9 million, $650 million and $687 million in dividends and repurchased shares worth $203.5 million, $261.8 million and $482 million, respectively. These actions boost investor morale.

RSG operates in a fiercely competitive solid waste industry. Large national waste management companies, multiple municipalities, and several other regional and smaller companies give tough competition to Republic Services. Competitive pressure compels the company to boost investments to grow, which may affect profitability.

Republic Services' current ratio (a measure of liquidity) at the end of the second quarter of 2025 was 0.66 lower than the industry's 1.03. Although the current ratio increased 11.9% from the year-ago quarter due to a decline in current debt, highlighting the strength in its liquidity position, we must keep in mind that the current ratio is still lower than 1. It means that RSG will be inefficient in covering its short-term obligations.

Earnings Snapshot

Clean Harbors, Inc. (CLH - Free Report) reported mixed second-quarter 2025 results.

CLH’s earnings of $2.36 per share outpaced the Zacks Consensus Estimate by 1.3% but decreased 4.1% from the year-ago quarter. Total revenues of $1.5 billion missed the consensus estimate by 2% and decreased marginally on a year-over-year basis.

TransUnion (TRU - Free Report) posted impressive second-quarter 2025 results.

TRU’s quarterly adjusted earnings (adjusting 52 cents from non-recurring items) of $1.08 per share surpassed the consensus mark by 9.1% and increased at the same rate year over year. Total revenues of $1.1 billion outpaced the consensus mark by 3.7% and rose 9.5% from the year-ago quarter.


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